Recently, a lot of mobile banking applications have surfaced in Africa. Big players have emerged in the market. Startups from around the world have been racing to acquire this mobile transaction company, this only shows that Mobile money has gained a lot of preference amongst the people of Africa.
A Nigerian payments platform, Paystack, has been acquired by the US-based startup ‘Stripe’. On the other hand, Chipper cash, another US-based company has been working on its plan to make an entry to the African market by acquiring Soundwave for $500 Million, a platform that is heavily used in East Africa. All of these stats show to us that Africans are shifting to Mobile money by each passing day, So what are the causes for this new found love? Read on to find out 5 probable reasons.
Covid – 19: It might not be the prime reason for an increase in the use of mobile transactions in Africa, but the pandemic did play a huge role in boosting it. In Kenya itself, it has been noted that Mobile transactions saw a rise of 10%. This rise might not be temporary and will keep on increasing as people settle in with the convenience of mobile banking. The rise can be explained by the closing of banks in Africa due to public health concerns. Governments were looking for contactless payment methods and thus mobile banking was promoted more. Governments reduced the criteria required to sign up and made it easier for more people to be on the platforms. Transaction numbers doubled in the first month of the lockdown and as more people rushed in together with waivers on transaction fees introduced later, the numbers just went up.
Lower cost of transactions: With mobile banking platforms like M-Pesa in Kenya, the lower-income part of the population was saving a lot of money on transaction fees while sending or receiving money. If we go by what Mpesa charges 2021, the lower transaction fees meant the poor people in Kenya could receive or send money without losing most of it to hefty transaction fees imposed by the banks. Together with that, it also enabled the people to send money Internationally to one another easily, which was tougher in the past with higher bank transaction fees that Africa has. Some startups are working on making transactions from outside Africa easier as well, as many may know how costly it is to send and receive money from the continent.
Banking faster and safer: Mobile money has also made it possible for people to make payments faster and also safely. As most of the Africans live in rural parts where the nearest bank branch can be hours away. Crime is high in Africa, it also means that the people are going to be secure from probable theft on the way to the bank, or when they come back. Together with that, it also made transactions faster as people go cashless and don’t have to carry a big stack load of cash if they’re making big transactions in African currency. Plus, the inception of QR codes means payments can be done in seconds from mobile phones without having to reach out to grab the wallet.
Lifestyle improvement: Another good addition that comes with mobile banking has been the option to connect with the world without having to leave the comfort of their houses. Many Africans have been choosing mobile banking platforms to pay their utility bills and also make transactions to the government like paying taxes etc. This has helped reduce corruption in the community as well because contact with corrupt officials has been reduced. Together with that, the people have been using the other options that most mobile banking platforms offer including buying groceries while sitting at home and also applying for health insurance. All of this has promoted good lifestyle habits amongst the people of the continent.
Catastrophes and Disaster management: Africa is often faced with its fair share of natural disasters and other catastrophes. In the past, it has been really hard to send out relief all around the land. NGOs have been using mobile money platforms to pay their workers and making sure that relief work doesn’t come to a standstill in remote places. Some mobile banking applications have introduced features that make it easier to track people if they get displaced by floods or other catastrophes. One notable use of Mobile money is by WFP (World Food Program), which has been using mobile banking applications to enable hunger-stricken humans to avail emergency cash to take care of their needs. Governments have been using these applications as well to send out incentives to victims, money that they receive as aid, or from their own disaster management funds. Even if everyone in Africa does not have a bank account but most people these days have a smartphone, thanks to the reduced costs of entry-level phones in the market. This only means that more people also have the option to have mobile banks on their phones making transactions easier and life in general.