The mobile money industry remains one of the fastest-growing sectors of the African economy. In fact, the total value of mobile money transactions shot up by 39% to $701.4 billion in 2021. This effectively gives Africa a 70% stake in the global mobile money industry, which has now edged past the one-trillion-dollar valuation mark.
Another interesting stat is the fact the combined transaction value for the four leading mobile money platforms in Africa (M-Pesa, MTN MoMo, Airtel Money, and Orange Money) have reached $50 billion per month.
So, what is driving this growth? How resilient is it and what does the future hold? This page takes a deep dive into the current standing of the African mobile money market and the factors driving its growth.
What has spurred Africa’s Mobile Money growth?
The African mobile money industry has always had promise. But even the most outrageous early day projections have now been surpassed by the recent figures. Here are some of the factors driving this growth:
Africa’s mobile penetration is increasing
Mobile penetration in Africa has spiked in recent years. In fact, studies show that 44% of the population owned a device as of 2018, and the number of unique mobile subscribers is expected to reach 634 million by 2025. This factor has and continues to drive growth in the mobile money industry.
Improved Mobile Money services
There is no shortage of service providers in the industry. The likes of MTN, Vodafone, and Airtel have not shied away from bringing their corporate “tug-of-war” to the mobile money landscape — and this has triggered the development of various innovative digital payment products.
In June 2021, Vodacom in partnership with Alipay launched the Vodapay SuperApp, with more than 70 businesses that have chosen the platform.
Another example is the recent partnership between MTN Group and Flutterwave that will allow businesses to integrate the Flutterwave platform in Cameroon, Côte d’Ivoire, Rwanda, Uganda, and Zambia to receive payments through MTN MoMo.
Increase in contactless payments due to the COVID-19 pandemic
One challenge that arose during the early days of the Covid-19 pandemic was the difficulty accessing traditional financial services. But that too was a massive boost for the mobile money industry. In fact, while African banking revenues fell by 23% to 33% between 2019 and 2021, the mobile money industry witnessed steady growth within that same period.
Challenges facing the sector
The African mobile money market has defied many odds. There are, however, certain challenges that are still keeping the sector from reaching its highest potential. They include:
Cross-border payments challenges
Although numerous efforts have been made in this direction, the cross-border payments market in Africa has had little success. This has been attributed to issues with costs, efficiency, accessibility, and transparency. It goes without saying that the inability of this market to witness a breakthrough has slightly undermined the progress of mobile money in Africa.
There is still more room for improvement as far as digital inclusion in Africa is concerned. Factors, such as digital illiteracy and a lack of access, are still hampering efforts to increase digital coverage across Africa — and this has put a slight dent in the development of mobile money on the continent.
Future outlook of the market
A 2021 GSMA report offers some more insight into the trajectory and future direction of mobile money in Africa.
The report predicts that M-Pesa will continue to be a game changer for the industry, having already increased financial inclusion in Kenya by 57%. The report also recognizes Airtel Africa’s new $500 million funding and Orange’s plans to expand its Orange Bank Africa to other markets as radical developments that will further boost the growth of mobile money in Africa.
To say the African mobile money industry has a bright future may be a massive understatement.
Given that mobile penetration and the other growth factors are accelerating at such a tremendous rate, it is safe to assume that the industry has nothing less than an explosive future.