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The Resilience of Mobile Money in Sub-Saharan Africa

How industry and regulators together kept mobile money growing despite the COVID-19 pandemic
Mobile money agent in Kenya.

Over the last decade, the mobile money industry has grown stronger and stronger, with Sub-Saharan Africa as the main engine behind this growth. In fact, the region continued to grow through the 2020 COVID-19 outbreak, as well as through the regional and national lockdowns that came with it.

By the end of 2020, Sub-Saharan Africa accounted for 64 percent of all mobile money value transacted globally, reaching $490 billion for the year, an increase of 23 percent from the previous year. The region was also home to 53 percent of all monthly active mobile money accounts.

Mobile money accounts and transactions in Sub-Saharan Africa by GSMA
State of the Industry Report 2021, GSMA

Swift responses by industry and regulators

However, this growth was never a given. At the onset of the pandemic, there were fears that the decline in economic activity would also mean a decline in the use of mobile money. What made last year’s growth in mobile money possible was the quick response by providers, as well as the labeling of mobile money as an “essential service” by many national regulators. Twitter logo Providers in several countries responded by supplying agents with personal protective equipment (PPE), while also installing washing stations and sharing health guidelines.

These types of measures helped agent networks continue, not just to function, but to expand in spite of the pandemic. The region saw the number of active agents grow by an impressive 24 percent, from 1.9 million agents by end of 2019 to almost 2.5 million by the end of 2020.

One of the reasons why agent networks are so important is that, despite its booming cities, the majority of Sub-Saharan Africa’s population still live in rural areas. Crucially, population density in Sub-Saharan Africa also remains low and is, for example, a mere tenth of that of India. As such, physical agent networks, in one form or another, will remain instrumental in providing financial services to rural and geographically isolated populations on the continent.

More flexible KYC processes

One of the regulatory responses that had a direct impact on account registrations was the introduction of flexible Know Your Customer (KYC) and on-boarding practices. West Africa provides an excellent example, where by mid-2020, concrete regulatory measures had been taken in a number of countries, including Côte d'Ivoire, Ghana, Guinea, Senegal and Togo. Allowing more flexible KYC processes during the crisis meant that more people were able to make remote digital payments and also stay safe by avoiding the handling of cash. The practice also made it easier for vulnerable people to receive government-to-person (G2P) relief payments, one example being Togo’s Novissi program.

Despite the many positive outcomes, it is worth noting that some regulatory responses pose risks and challenges to the sustainability of the industry. The most glaring is the introduction of fee waivers or price controls. Despite increases in both the volume and value of transactions, 6 out of 10 mobile money providers in Sub-Saharan Africa saw their revenues decrease between March and June 2020. If prolonged, measures like these could pose a severe threat to the sustainability of the industry, to the detriment of the unbanked or otherwise financially excluded.

International remittances via mobile money

As the scale and the economic impact of the 2020 COVID-19 outbreak became clearer, many observers feared that international remittance flows would dry up, as a direct result of job losses. While it seems that cash remittances were adversely impacted, there was a significant shift towards digital remittances. International remittances sent and received via mobile money in Sub-Saharan Africa increased by 52 per cent year on year, reaching a total of $10 billion in 2020. Even by the most conservative forecasts, the value of international remittances via mobile money in Sub-Saharan Africa should surpass $1 billion a month by the end of 2021.

Total annual international remittances via mobile money
Total annual international remittances via mobile money
GSMA Mobile Money Programme, 2021

In retrospect, the year 2020 became a year of new partnerships. Mobile money providers became an integral part of national COVID-19 responses and provided critical rails for delivering financial assistance quickly, safely and efficiently. Twitter logo The new partnerships forged during the crisis, together with increased transaction and balance limits, are likely to have a lasting impact on the mobile money industry, and possibly even consumer behavior.

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