Closing Africa’s financial inclusion loop

The digitalisation of global payments is becoming ever more pervasive, and Africa is fully onboard. Although cash is still king, many individuals and businesses are increasingly offering digital payment options, with mobile money being prime.

Financial inclusion continues to advance on the continent, with more individuals able to transact without having to physically handle cash. Interoperability across mobile network platforms has also had a crucial role to play in the proliferation of mobile money as a key alternative to cash.

Nations that have put in place measures for users to transact across the available mobile money platforms have seen year-on-year growth both in terms of active users as well as transaction volumes.

During the period January to November 2021, mobile money transactions hit a 10-year high of Sh6.246 trillion ($55.1 billion), a 38 percent jump compared to the corresponding period in 2020, according to statistics provided by the Central Bank of Kenya (CBK).

That amount is equivalent to 56 percent of Kenya’s reported GDP of $98.84 billion. That points to a gradual reduction in the prevalence of cash as more digital payment solutions become available on the continent.

As already cited, one factor that plays a crucial role in the prevalence of mobile money is the interoperability of the different mobile money providers and financial institutions allowing users to send money across different mobile network operators (MNOs), and from their bank accounts to mobile wallets.

The interoperability of these services was implemented by the CBK in 2014 and spurred the growth of the service. As of November 2021, Kenya had 67.15 million registered mobile money accounts, as per the CBK’s records, a significant increase from 24.9 million in November 2014.

These industry growth statistics highlight the role of digitalisation in Africa’s economies, with those embracing digital platforms making strides in economic development and financial inclusion. However, there is still room for the adoption of technology in assisting governments and regulators to drive these developments and effectively perform their oversight duties.

There are several systems already being developed by technology companies and some African nations have already taken them up. These systems can assist in the monitoring of the mobile money sector, interoperability of payments and remittance oversight amongst others.

Indeed, going forward, the adoption of technologies to manage the various payment platforms through a centralised system has the potential to alleviate the system fragmentation currently experienced.

The digital payment systems in Africa remain highly fragmented and the different interoperability gateways still do not respond to the urgent need to implement a comprehensive solution that presents cost-effectiveness of transactions to the end-users.

If well regulated and monitored, mobile money interoperability platforms have the ability to promote lower cost, more secure, and frictionless mobile money transactions, thus acting as a catalyst for sustained growth into the future.

At Global Voice Group, for instance, we developed a platform to address interoperability challenges and contribute to an improved digital transactions ecosystem across the continent.

While technologies such as ours strive to better channel and regulate the rapid digitalisation across Africa’s fast-growing economies, there is still significant room for improvement across the payments ecosystem.

With the continued improvement of interoperability, remittance oversight and growth of the mobile money industry, Africa will increasingly take bolder strides toward complete financial inclusion and the displacement of cash as the primary mode of transaction.