Africa – leads continents banking by mobile phones

by | Apr 28, 2012 | Technology: Issues and Uses

Three-quarters of the countries that use mobile money most frequently are in Africa, and mobile banking in some of them has reached extraordinary levels according to a report in The Economist in an article entitled “Press 1 for modernity”

Many people know that “mobile money”—financial transactions on mobile phones—has taken off in Africa. How far it has gone, though, still comes as a bit of a shock.

A new survey of global financial habits by the Gates Foundation, the World Bank and Gallup World Poll found 20 countries in which more than 10% of adults say they used mobile money at some point in 2011. Of those, 15 are African. In Kenya, Sudan and Gabon half or more of adults used mobile money. In contrast, in countries with more developed financial systems, the share of adults who use mobile money is tiny—1% in Brazil and Argentina. If you think of banking by phone as just a way of using financial services, then these African countries—where people sometimes live several days’ walk from the nearest branch—are much more financially literate than you might think, just by looking at how many banks they have.

A new survey of global financial habits by the Gates Foundation, the World Bank and Gallup World Poll found 20 countries in which more than 10% of adults say they used mobile money at some point in 2011. Of those, 15 are African. In Kenya, Sudan and Gabon half or more of adults used mobile money. In contrast, in countries with more developed financial systems, the share of adults who use mobile money is tiny—1% in Brazil and Argentina. If you think of banking by phone as just a way of using financial services, then these African countries—where people sometimes live several days’ walk from the nearest branch—are much more financially literate than you might think, just by looking at how many banks they have.

For the most part, mobile-phone money is a substitute both for paper-based banks and for, say, sending cash via a bus driver. It enables people who cannot get to a branch or ATM to use financial services. This helps offset the bias of the banking system towards the well educated. In Africa only about 10% of people with primary or no education have bank accounts, compared with 55% of those with tertiary education. But rates of phone banking in some countries are high enough to prove that the practice is spreading beyond university graduates to the rest of the population.

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