africa-race
Mobile Communications

Africa is sprinting ahead of the mobile-money world

“A decade ago, just one in five of the global population was a mobile subscriber – we have now surpassed the 50% milestone and can look forward to connecting a billion new subscribers over the next five years,” commented Anne Bouverot, Director General of the GSMA at the recent Mobile World Congress event in Barcelona. Great stuff. Tell us something we didn’t know. What does this really mean anyway? That mobile operators and handset manufacturers are just getting richer?

It could mean that mobile access is getting more crucial to daily lives even if it is not always getting more affordable. It was interesting to see an ITU report recently that outlined mobile internet growth figures for 2014. Mobile broadband penetration reached 20% in Africa last year according to the ITU. That’s broadband mobile, not just mobile. It’s a 40% growth in four years, the fastest growth of any global region.

On its own this is not significant news. It’s no secret that a lack of fixed broadband infrastructure in developing countries has meant that mobile is the only means possible of getting online. As a result, mobile growth rates will be on a steeper curve when compared with other regions with more mature fixed broadband networks. What is interesting is how this has had an impact on the lives of people and the services they use.

Lesson One: Better than toilets and water

While a report from African think tank Afrobarometer revealed that mobile phone coverage is more widely available than electricity, piped water, roads and sewerage services, use of that coverage has been driven primarily by money transfers and education.

The money transfer bit is not new. Deals between banks and mobile operators for money transfer services have been coming thick and fast over the past few months with Orange and Ecobank the latest in a line of commercial agreements.

It has not escaped the attention of western businesses either. Only last month London-based WorldRemit raised $100 million in funding from investors including Silicon Valley-based Technology Crossover Ventures. More than 50% of WorldRemit transfers to Africa are received as mobile money or airtime top-ups. It also recently signed a deal with South Africa-based telecommunications giant MTN to enable its customers to send money to MTN’s mobile clients.

As the Boston Consulting Group warned in one of its analytical perspectives earlier this year, such is the potential of mobile money transfer in Africa that “although the exact shape of the market remains to be determined, African banks and mobile operators cannot afford to ignore mobile financial services.”

It’s advice that has not fallen on deaf ears. Africa is clearly an alluring market for any mobile payments business. Using a mobile to pay bills for a variety of products and services such as electricity, water, cable television and sometimes food has meant that African mobile users are already doing more with mobile payments than most other regions across the globe. Approximately 40 million Africans use mobile wallets.

“Africa is already sprinting ahead of the rest of the world when it comes to mobile money services,” comments Iain Mackenzie, head of content and communications at WorldRemit. “According to GSMA’s recently released Mobile Financial Services for the Unbanked report, there were 255 active mobile money services in December 2014, more than half of which are in Africa. Active users of mobile money services jumped from 60 million at the end of 2013 to 103 million over the same period.”

Mackenzie points out that for many Africans, mobile money will be their first and only means of accessing financial services. There are currently two and half billion people in the world without a bank account he says. One billion of these people have mobile phones and so potentially have access to formal financial services through mobile money. In 16 markets there are now more mobile money accounts than bank accounts.

“The lack of payments infrastructure in many parts of Africa – bricks-and-mortar banks, point-of-sale terminals, credit/debit card distributions networks and the like – has in many ways liberated the continent from the legacy systems and outdated, inefficient payment models that can be prevalent in developed economies,” adds Mackenzie. “Africans using mobile services - for example, MPesa in Kenya, MTN in Uganda or Ecocash in Zimbabwe - can transfer funds instantly and at a low cost, to other users.”

This he says is transforming lives and helping to lift “swathes of the population out of poverty.”

Lesson Two: Educating Africa

Another application which is driving mobile use in Africa is education.  An On Device research poll last October found that education actually topped a list of what Africans thought were the most useful mobile applications. The poll says that this combined with money transfer has “greatly improved lives”.

The use of mobile in education is an understandable solution given the increasing penetration of smartphones, after all not all schools and students on the continent can get access to a Samsung Solar Powered Internet classroom

With mobile broadband growing in popularity developers are emerging to fill the education void left by a lack of ICT infrastructure in schools, colleges and homes. In South Africa for example, a startup called Learning Lab Apps is developing mobile education apps for teachers, students and parents, the first of which is called WorksheetCloud, a repository for hundreds of downloadable revision worksheets. Similar start-ups can be found in pockets across Africa, taking advantage of mobile technology penetration and development, but not all companies need the internet.

In Kenya, Eneza Education wants to make “50 million kids across rural Africa smarter” and uses a text-based application and SMS reporting to guide students through subjects and tests using old, pre-internet mobile handsets. It’s a simple solution to a problem and uses existing tools and does not demand upgrades and uncomfortable investment. But of course it is limited.

Broadband internet will eventually drive education in Africa on mobiles and tablets. It has to. The ITU said as much at the UN Broadband Commission for Digital Development meeting in Paris in February this year. In a statement it said:

“If an average of eight children share each classroom computer in OECD nations, in Africa teachers can struggle to share each computer among 150 or more pupils. But with increasingly sophisticated mobile devices now packing more computing power than the famed ‘supercomputers’ of the late 1990s, the Commission believes broadband-connected personal wireless devices could be the solution.”

I think we knew that already. And more importantly so it seems, does most of Africa. The problem is finding solutions that have an impact now, such as Eneza Education, and acting on it, no waiting around but using existing technologies to make a social impact. And that’s what Africa is doing well with its mobile use. The mobile is needed to solve specific problems and the developers just get on with it and make it happen. If only we could apply the same logic to some of our services.

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Marc Ambasna-Jones

Marc Ambasna-Jones is a UK-based freelance writer and media consultant and has been writing about business and technology since 1989.

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