Ideas & Debate

Wins that mobile phone can score in capital market

Mobile solutions: Report says hand-held gadget can help bridge the financial inclusion gap  and increase activity on the stock market through various products. FILE PHOTO | NMG
Mobile solutions: Report says hand-held gadget can help bridge the financial inclusion gap and increase activity on the stock market through various products. FILE PHOTO | NMG 

At the end of 2016, there were 420 million unique subscribers in sub-Saharan Africa, equivalent to a penetration rate of 43 per cent. This is according to GSMA Intelligence’s GSMA sub-Saharan: The Mobile Economy 2017 report released recently.

Further, the survey showed that mobile technologies and services generated Sh11 trillion of economic value in sub-Saharan Africa in 2016, equivalent to 7.7 per cent of GDP. The mobile ecosystem also supported approximately 3.5 million jobs in sub-Saharan Africa in 2016.

In Kenya, the mobile revolution is making significant contribution. For instance, by providing the poor with the financial services they need to make investments and manage unexpected expenses, the mobile money services industry is helping to eliminate extreme poverty.

Recent estimates found that access to M-Pesa has lifted 194,000 households in Kenya out of poverty since its inception in 2007.

Adding to this, more than 40 per cent of the adult population in Kenya is now reported to be using mobile money regularly. From a capital markets standpoint, mobile penetration (sitting at 59 per cent) can help score several important victories too. In this article, I highlight only two.

One, through mobile connectivity, financial markets can help deepen financial inclusion – especially for the young. According to the 2016 FinAccess Household Survey, 23 per cent of young adults aged 18 to 25 years are excluded and are less likely to have formal accounts compared to the national average of 17.4 per cent. Since majority of youth are tech-savvy, signing them up should not be a problem.

Perhaps, the only hurdle would be investor education. On the same point, the report also showed that exclusion for the poorest continues to be high at 42 per cent compared with the national average of 17.4 per cent.

By contrast, 95 per cent of the wealthiest quintile are formally included. Again, increasing mobile-based solutions can help bridge this gap and deepen financial inclusivity.

Two; through mobile financial services, markets can present a formidable alternative to betting. With several intermediaries now shifting to mobile-based trading, it’s safe to expect such development. Of course, by any measure, this is no small war.

Just to give perspective, according to a recent (March 2017) GeoPoll rapid survey, Kenya was reported as having the highest number of betting youth in sub-Saharan Africa.

The survey also established that more than half (54 per cent) of youth in the region have tried their hand at gambling with Kenya having the highest number of betters at 76 per cent.

What’s more, a Digital Skills Observatory survey showed that smartphone usage in the country seemed to increase the amount of time people are spending gambling.

But be that as it may, improving mobile connectivity, together with a sustained thorough investor education campaign, this battle for minds can be won.

Indeed, mobile phones have become a vital tool. There is no doubt the expanding mobile money ecosystem has brought about huge economic and social gains. For the financial markets, it’s a wonderful opportunity to add on the same. The impact on the economy could be transformative.