International Monetary Fund report Financial Access Survey (FAS) shows that mobile money is increasing financial inclusion in the Sub Saharan Africa region.
The survey measures and monitors financial inclusion and benchmarks the progress made across different regions in the world.
The service offers a novel way to access financial services, especially for individuals who do not have access to traditional banking services, as the only requirement is a basic mobile phone.
Regions with a large footprint in the sector such as Sub Saharan Africa are leveraging on the base of its users to make inroads into traditional banking.
For instance, M-Shwari account launched jointly by the Commercial Bank of Africa and Safaricom in Kenya, offers savings and credit facilities that can be accessed entirely through Mpesa.
Furthermore, the public is moving towards mobile and internet banking to access financial services partly explaining FAS data indicating a muted growth in the number of commercial bank branches globally.
East African region has been a pioneer of this revolution with Mpesa launched in Kenya in March 2007 by Safaricom now has almost 30 million users in 10 countries.
Efficiency and safety for users have driven uptake in this kind of transaction as it includes a relatively safe and affordable store of value and means of funds transfer. In addition, it allows the timely transfer of small amounts of money among family/community members in times of financial distress.
On top of that, public sector efficiency gains such as in Kenya where the widespread use of the service is supported by the government through digitization of payments for government services. In this case, about 90 percent of transactions of e-citizen – the official government payment platform in Kenya – are made using the platform.
IMF recommends strengthening of consumer protection and regulatory frameworks to maintain financial stability. For instance, in Kenya, the government has already instilled regulations requiring the formal authorization of new service providers.