Language English
FrançaisPortuguese

Mobile Money Is Driving Financial Inclusion In Africa, But Not Everyone Is Enjoying The Benefits

By IKWAP AMOS Posted on 01 September 2016
Mobile Money Is Driving Financial Inclusion In Africa, But Not Everyone Is Enjoying The Benefits

Kenya has been ranked first among 26 developing countries in a study by the Brookings Institution on the inclusiveness of the country's economy and ease of access to financial services.The Financial and Digital Inclusion Project report examines the equal distribution of financial services in selected countries in Africa, Asia and Latin America, with the results suggesting that Kenya leads the rest of the world in promoting wider sharing of the nation’s growing wealth.

Other African countries also received high ratings as well in the survey carried out by the Washington based research institution. South Africa is fourth, Uganda fifth, and Rwanda seventh on the list, ahead of countries such as Chile, India and Turkey. Tanzania was ranked 17th. Kenya is a world leader when it comes to mobile money adoption, particularly in low-income households. The country's mobile money ecosystem is complex, with services that allow for savings and access to credit in addition to cash remittances.

The survey looked at four key aspects of financial inclusion; government commitment, mobile capacity, regulatory environment and adoption of traditional and digital financial services.
Kenya scored highly in each category with an average score of 84% that placed it five points ahead of second placed Colombia. Rwanda, Tanzania and Uganda also ranked highly for access to mobile money resources.

However, the report suggested that the increasingly thriving financial inclusion ecosystems present in Kenya, Uganda, Tanzania and Rwanda can be made even stronger with increased build outs of mobile capacity.The study cautioned that mobile money alone is not enough to drive financial inclusion, and more needs to be done to make financial services readily available, particularly to low-income households.

Uganda was ranked fifth in East Africa in income economy on Brookings’ scorecard. This is due to a failure to facilitate greater competition within its financial services ecosystem, and the failure to expand affordable financial services among low income consumers. Government interference in the ecosystem was also to blame, with the recent shutdown of mobile money services during this year’s presidential elections and the recent instances of fraud in financial institutions also adding to the negative assessment.

Rwanda on the other hand was praised for the progress it has made toward its stated objective to digitize everything. Despite being described as a lowest income country, Rwanda is committed to advancing financial inclusion and the promotion of digital financial services.

The survey however pointed out the disparities in mobile phone ownership in Rwanda with women, citizens living below the poverty line and residents of rural areas being the most affected. There is a 21 percent point gap in handset ownership between men and women in Rwanda.

Tanzania has also made significant strides towards its financial inclusion with its mobile accounts surpassing bank accounts as noted by the survey. However, Tanzania’s consumer access to mobile technology is heavily affected by heavy taxation of the sector. Taxes are said to account for one-third of the cost of mobile phone ownership in Tanzania.

Financial inclusion remains a pressing concern in developing countries, and those without access to formal financial services may find it hard to access credit and savings facilities. This report identifies each country's strengths and weaknesses using metrics such as the level of mobile money use and how committed the regulators are in promoting financial inclusion. Facilitating financial inclusion is essential to promote the wellbeing of low-income households so that they can benefit from broader economic development and access to the mainstream economy.

Get involved
We seek to empower the spirit of entrepreneurship in Africa

  • Facilitate access to finance
  • Connect businesses horizontally and vertically
  • Create an exchange of know-how
  • Engage the relevant Public-Private dialogue
Image #1
Image #1

Recent stories News Feed

Information is the ‘food’ which feeds economic growth. Read the latest news impacting Africa’s Private Sector.

Discover
Signature of a memorandum of understanding between CEMAC and EMRC

Signature of a memorandum of understanding between CEMAC and EMRC

Ensuring food security, reducing poverty by increasing the integration and regional synergies of Central Africa (Cameroon, Congo Brazzaville, Chad, Central African Republic, Gabon, Equatorial Guinea) is the challenge of CEMAC (Economic Community of Central African States).

Volkswagen opens car assembly plant in Kigali

Volkswagen opens car assembly plant in Kigali

Rwanda assembly begins, at the rate of 1,000 a year, with Polo and Passat. Capacity for 5,000 units is planned
Rwanda assembly begins, at the rate of 1,000 a year, with Polo and Passat. Capacity for 5,000 units is planned

Volkswagen has launched integrated mobility in Rwanda which includes local vehicle assembly, mobility services and a sales and service retail outlet called CFAO Volkswagen Rwanda.

5 Most Innovative startups in Kenya

5 Most Innovative startups in Kenya

Kenya has positioned itself as one of the most prominent startup destinations in Africa.

With the rise of innovation hubs and accelerator programs in Kenya, there has been great growth for entrepreneurs with over 600 hundred start-ups in the country.

Access to internet and a great education system are also some contributors to the increase in startups and innovation.

Can the digital revolution transform agriculture?

Can the digital revolution transform agriculture?

The world talks a lot about the digital revolution, but few connect it to the coming agriculture revolution, especially in Africa. Digital solutions have huge potential for helping farmers boost productivity and connect to financial tools and markets around the world.