Banking for the Unbanked — Mobile Money in Sub-Saharan Africa

While Sub-Saharan Africa has some of the lowest levels of infrastructure and resources in terms of access to basic needs and socioeconomic services, mobile phone use and ownership have increased dramatically over the past two decades.

Mobile phones have become extremely prevalent tools for connectivity, as well as for access to information as well as social and financial services, used by over half a billion people in this region.

Mobile money (mMoney) in Sub-Saharan Africa has become a needs-based contextual solution for saving, sharing, and borrowing money, and can be adopted across healthcare, agriculture, education, and other sectors.

Part of my master’s research looked at the both the social and economic potential mMoney could have on the existing patterns of social life. I looked at who in particular is adopting mMoney services in Sub-Saharan Africa, and why, and whether these services have an impact on the reproduction of existing patterns of social life. I also looked at whether there are significant differences in the uses and meanings of these services in different locales, and if so, what key factors shape those differences. While my research was extensive, here is my attempt at a summary.

mMoney and Financial Inclusion

Until recently, people living in rural African regions have been excluded from the opportunities to securely save money. Traditional financial services often do not reach rural populations, whether it is because there are no bank branches in the area, or because formal banking services are too expensive.

As a result, many people would save money by hiding cash or borrowing money from unlicensed lenders. Both of these solutions involve high security risks and can be quite expensive.

Fortunately, with the recent rapid development of mobile networks and subscriptions, mobile financial services are being distributed to various “unbanked” regions.

As many people in developing countries do not have smart phones, many of these services are designed to work on 2G phones, and work solely using basic SMS.

According to the GSMA 2015, Sub-Saharan Africa has the highest level of mobile money diffusion across the regions of the world.

The reason for this surprising statistic may be due to the necessity / existing financial gap in banking services in Sub-Saharan Africa.

Mobile money is now accessible in over 60 percent of developing markets and is most widely spread in Sub-Saharan Africa, followed by South East Asia and Latin America. A few of the most successful mobile money services include M-Pesa in Kenya, Smart in the Philippines, and EasyPaisa in Pakistan.

M-Pesa in Kenya provides the best and most successful example of the impact mobile money is having on developing countries. Due to M-Pesa’s success in Kenya, it has spread to 19 African countries.

“M-Pesa’s impact in Kenya put mobile money services on the map, and the subsequent proliferation of similar services can be credited to this success” — (Daniel Runde, 2015).

As M-Pesa’s service is affordable and popular, it results in substantial returns and creates new job opportunities, which therefore heightens peoples’ livelihoods and freedoms. People can also become M-Pesa agents in their village, which further enhances M-Pesa’s accessibility to its users, and reduces exclusion and unequal distributions of power.

As services continue to advance, people can now borrow money through some of the available applications, regardless of whether or not they have credit history.

Mobile money breaks through the barriers of formal financial systems in a growing number of countries leading towards systems of more inclusive growth.

mMoney and Community Relations

While mobile money has been implemented in Kenya for the purpose of financial inclusion, it has become just as important in Kenya for access to social networks.

Mobile money services are argued to be a means of enhancing and maintaining social relationships. While mobile money is used for business relationships, over 75 percent of the transactions made are between friends and relatives.

People will often make sacrifices to obtain a phone to further embed themselves in family networks, social obligations, economic opportunities, and reciprocities. Similar to mobile phone use for phone calls and text messages, money transfers are a type of gift that are often necessary in many social relationships. Sending and receiving mobile money is a support system, similar to sending phone calls, text messages or flash calls (where people place daily missed calls to loved ones to show that they were thinking of them without paying for the phone call) between two people.

mMoney and Female Empowerment

It can be argued that mMoney services such as M-Pesa can also be tools of empowerment to women.

For example, studies have found that with mobile money services, such as M-Pesa, women are now able to control their own capital without having to constantly seek consent from their husbands.

The result of having increased access to a system of financial saving has resulted in numerous changes in the lives of women. Many women use M-Pesa as a safe means for financial security as they are now able to separate their money from that of their spouse. M-Pesa also makes it easier for women to collect funds quickly and regularly from their husbands and other contacts because these services are available globally.

With their own money, women can choose where and when they allocate their personal funds to better their own lives, and the lives of their families and communities.

mMoney has become not only a tool for person-to-person transfers, but also for members of a collective group. Rotating Savings and Credit Associations (ROSCAs) are important in Kenyans’ economic practices. ROSCAs are about group participation, where people meet on a scheduled basis to work together and pool resources to make investments and maintain friendships. Often these groups are mainly comprised of women. This can lead to new ways for women to gain social and economic capital together with an organized community.

mMoney and Place

While mobile services continue to grow in Africa as a means for social and financial inclusion and rural livelihoods, this does not mean mobile money schemes will be successful everywhere.

A major factor to the success of the mobile economy in Sub-Saharan Africa is based on a regions’ regulations and policies. The more adaptable a given government is to technological innovations, the more the people living in that particular region are able to benefit from mobile services.

There is also a relationship between the success of mMoney’s systems and poor countries lacking infrastructure. The more financial difficulties there are in a country, the more likely mobile money will be a successful tool. For example, while mobile money is frequently used in Zimbabwe to send and receive money, it is unsuccessful in South Africa, Zimbabwe’s wealthier bordering neighbour.


mMoney applications can alleviate exclusion from financial information and practices and improve the livelihoods of rural populations to the previously ‘unbanked’. mMoney services can have an impact on the ways in which relationships take place, as well as females roles within a community. However, the structural and contextual characteristics of a place have an impact on mMoney’s success.

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