Being a young Zimbabwean who holds no faith in our banking system – mobile money has been a big part of my life. Around 49% of Zimbabweans are registered with a mobile money service. 1 in 2 Zimbos is a significant number and this got me wondering – Is the story the same in other countries in our region?
We looked at 8 Southern African countries, taking into consideration the number of mobile money users, mobile money users as a percentage of the population, transactions processed and the agent networks.
Compiling the data
Whilst there is no explanation by data aggregators such as GSMA as to why some providers don’t provide the data for their most recent mobile money report – I assume it’s because the data isn’t widely reported (or valued) in certain countries. The biggest offenders in this regard for me are South Africa and Namibia.
Some of the data deficiencies seem to be a result of the fact that regulation of mobile money usually works as follows. Initially, the regulation is done by whoever regulates mobile networks and they don’t seem to compile all the data with fields such as agents and transactions processed getting left out.
At a later date, the regulation of mobile money is then taken over by the Central Banks who layout regulatory frameworks but at times still don’t share statistics.
Regardless, we will compare the data at hand and make some conclusions based on that.
Lay of the land…
|Countries||Population||Mobile money subscriptions||Mobile money users as % of population||% of population with Bank accounts|
- Of the 8 countries, half have a larger mobile money user base compared to those with bank accounts. Of those Zimbabwe has the largest disparity (21% more mobile money users than there are banked people) which explains why mobile money is so intrinsic to us.
- On the opposite end of the spectrum is South Africa, where mobile money initially failed to take off between 2012 and 16′. MTN relaunched their mobile money service this year and the jury is still out regarding whether it will actually be a success. The argument in South Africa has been that their payments and banking system are evolved to the point of making mobile money redundant and at the time of writing that has proved to be true.
- Mozambique seems to be striking a happy medium with 1 in every 5 people having a mobile money account and 1 in 3 having a bank account. A large portion of the Mozambican population seems to be underserved by both banks and mobile money. Given that there are said to be 14 million mobile subscribers suggests that mobile money could end up being equal or overtaking the banking sector in that country.
- In a country like Namibia where 77% of the population is banked, it’s hard to see where or how mobile money becomes as essential. They already have a great banking system and with banks on the continent trying to close the gap in functionality between themselves, mobile money and fintech’s it’s hard to imagine mobile money becoming more significant in that context.
The agent story
5 of the countries above report on agent numbers and thus the table below attempts to establish how widespread the agent networks in these countries are;
|Countries||Number of mobile money subscriptions||Registered agents||Mobile money users per agent|
- The number of agents per user in Lesotho and Zimbabwe are pretty similar and I believe this boils down to the fact that EcoCash is present in both countries and thus they are using an agent model that is most likely identical. Knowing what we know about the agent story in Zim – most of these people were actually earning most of their money based off commissions they make when mobile money users cash-in and cash-out.
Agents have two primary functions at the moment i.e onboarding new subscribers and facilitating Cash-in/Cash-out transactions.
For agents earning a significant chunk of their money from agent activities they could face a problem going forward – their earning capacity diminishes if and when i) mobile money user growth becomes stagnant resulting in fewer people to onboard and ii)Interoperability (which benefits the consumer) threatens the agents commissions directly – as interoperability at the subscriber level could lead to less cash-in/cash-out with subscribers sending funds directly to one another.
When it comes to transactions processed, the data is even thinner than the rest of the fields we’ve looked at but there’s no harm in gleaning on the crumbs we have at our disposal;
|Countries||Number of mobile money users||Transactions processed in a single quarter (million)||transactions per subscriber|
The most interesting thing from the above table was simply the fact that despite having a comparable number of mobile money users between Zim and Mozambique – Zimbabweans were transacting nearly 5 times more than Mozambicans on mobile money. This is reflective of the fact that mobile money in Mozambique is used more to send and receive money than it actually is used to transact. In Zimbabwe, because of cash shortages, cashing out and using the funds off-platform has become harder and thus subscribers are forced to transact electronically.
Whilst, I previously mentioned that banks in the region and the world over are trying to become more flexible and offer services offered by mobile money and fintechs which will probably chip away at the growth a bit. The advantage that mobile money has over banks though that their solutions don’t need the deployment of hardware in the nature that many banking solutions do.
If I had to make a prediction, I don’t think growth will be as rapid as it was in the last decade and one of the main reasons for that is simply that regulatory scrutiny has increased since the banking industry cried that the lax regulation of mobile money accelerated scale