The mobile money boom: North and South Africa are still lagging behind, and here are the reasons

#The Kingdom of Morocco Africa has monopolized 70% of the world’s mobile financial transactions, estimated at more than $1,000 billion. This volume is driven by West and East Africa, while North and South are still far behind. details.

Africa is the world’s leading player in mobile financial services, making a strong contribution to the financial inclusion of a continent where access to banking cares only for a very small portion of the population. All indications clearly show that the continent, which witnessed the emergence of the first transactions in the sector, is still dominated by it. In 2021, 53.9 billion mobile financial transactions were recorded (merchant payments, international remittance flows, remittances, bill payments, public aid, group payments, etc.), a 21% increase over the previous year, Africa recorded 36.6 1 billion transactions (+23%), or 68% of global financial transactions via mobile, according to data from the GSMA annual report.

On the mobile phone transaction volume side, out of a total volume of $1040 billion, the African continent has a monopoly of $701.4 billion at 70%.

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It must be said that the continent has the largest number of open accounts, i.e. 605 million out of a global total of 1.35 billion, i.e. 45%. Even better, of the 346 million active accounts in the world, 183 million, or 53%, are African. This means that Africa, where mobile money has emerged, is still the main player in it.

Behind this rise are various factors. In addition to the recovery of African economies, there is in particular the impact of accelerating digitization at the continental level under the impact of the Covid-19 pandemic that has strongly stimulated mobile payments.

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However, this significant increase is not uniform at the level of the African continent. While mobile financial transactions are exploding in West and East Africa, this is not the case in South Africa, and above all in North Africa. East Africa, the cradle of mobile money, with 296 million accounts opened, of which 102 million are active, saw the number of mobile transactions grow 22% to 24 billion, generating $403.4 billion in volume, or 38.80% of Mobile phone financial business volume in the world.

West Africa is the most dynamic region in the world today. The number of open accounts reached 237 million, of which 58 million were active, and 9.3 billion transactions were recorded in 2021, an increase of 27% over the previous year, with a volume of 60% increase to $239.3 billion.

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Source: GSMA

In contrast, the development of mobile financial services remains slow in North and South Africa. The first region, which has only 1 million active accounts and just 77 million recorded $3.7 billion in mobile money transactions, while the second operates just under the second, as mobile money struggles to make its way. Southern Africa has 4 million active accounts. In 2021, 335 million transactions with a volume of $4.9 billion were recorded.

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This situation is largely due to the high rate of banking services in North and South Africa. For example, in South Africa and Morocco, rates for banking services are about 80%, according to official sources. Thus, many financial transactions made via mobile in other sub-Saharan countries in these countries are carried out through banking services, especially since new functions of automated teller machines (ATMs) now make it possible to carry out many operations, such as transferring money. Thus, mobile money is struggling to take off in these countries where financial inclusion is primarily through the banking channel.

Conversely, in West, East and Central African countries, the average rate of banking services is around 16%. Thus, mobile financial services contribute to financial inclusion by making it possible to carry out a large number of financial transactions for people without bank accounts (money transfers, bill payments, merchant payments, etc.).

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In addition to the impact of banking, the development of mobile money can also be explained by the high prevalence of mobile phones on the continent, which means that everyone is now connected, especially since transactions do not require owning the latest generation of phones.

Moreover, the absence of taxes on mobile money transfer services in a large number of countries and low fees makes operations globally competitive and encourages the extensive use of these means of transactions, especially for money transfers. Competitiveness has increased through strong competition between operators in this sector. By way of illustration, in Senegal, since September 2021, Orange Finances Mobiles no longer charges fees for withdrawals and applies a flat commission of 0.8% for sending money.

Finally, less restrictive regulations regarding telecom operators have helped boost sector development in these regions.

In short, all these factors explain why mobile financial services are enjoying remarkable success in Africa, especially sub-Saharan Africa, and are attracting more and more foreign operators. One of the latest entrants to this market is none other than the American wave, which chose Senegal and Côte d’Ivoire to begin its conquest of the West African market with a very aggressive pricing policy.

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It remains to be seen whether taxation on certain transactions, called for by certain countries and already initiated by others, which will certainly spread widely on the continent, will not slow down the growth of the mobile money sector. In early 2022, the Cameroonian government announced a 0.2% tax on mobile money transfers and withdrawals. This is also the case in Ghana, where in March 2022 Parliament adopted a tax of 1.75% on all mobile money transactions over 100 cedis, or about 12 euros.

And taxes, which angered the population, which could have direct repercussions on the development of the sector, while banks remain low on the continent, with the exception of North African countries.

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