Mobile money moves ahead in Africa

Cellphone has become a major medium for development, including banking and payments services

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As Africa gears up for a new century of rapid economic growth, infrastructure investment and greater political stability, the mobile phone is proving a major catalyst in its transformation.

Far more than just a means of communication for citizens, businesses and governments, the cellphone has become a major medium for economic, social and political development.

One of its most exciting uses is to bring banking and payments services to Africans, particularly those from low income strata with little access to formal financial services.

Citi Global Transaction Services (GTS) and the GSM Association (GSMA) recently hosted a conference in Nairobi dedicated to the phenomenon.

'Mobile Money Policy Forum: Partnerships for Financial Inclusion in Africa' was attended by senior officials from telecommunications, finance and economic development ministries throughout Africa, as well as bankers, mobile network operators (MNOs), utility companies, charities and NGOs.

"The mobile phone's ubiquity provides an existing and cost-effective channel for the unbanked to reach the market and the market to reach the unbanked," said Ade Ayeyemi, Head of Africa for Citi GTS. He also stressed the need for governments to assist banks and mobile network operators by creating the right regulatory environment.

Africa is the fastest growing region in the world for mobile penetration, with 500 million of the five billion global subscribers. Mobile payments also offer an attractive new income source for MNOs as the average revenue per user declines.

While banks and MNOs provide mobile payment infrastructure and effect payments, m-money recipients themselves no longer require bank cards, ATMS, or even banks themselves to access their money.

Customers who receive a mobile payment can convert it to cash at a local agent working in partnership with the transmitting MNO. Agents are becoming increasingly numerous and include corner shops, petrol stations, chemists, mobile phone dealers and other retailers.

As well as accepting a customer's m-payment in exchange for cash, an agent can convert cash into e-money for the customer to send to another recipient.

The two main types of 'm-money' transaction are remittances to individuals (84%) and purchases, which include shop purchases and utility bill payments.