Mobile financial services will drive significant economic development in Africa

NEW YORK, USA: “Mobile banking and P2P transactions will, over time, be among the best things that have ever happened to Africa,” says ABI Research senior analyst Mark Beccue.

This seemingly radical and utopian hope is supported by a growing body of evidence. While the mobile financial ecosystem in the developing world is still small, it will start to take off in earnest in 2011. In 2009, subscribers to mobile P2P services in Africa totaled only about 9 million. In 2015, according to the latest ABI Research forecasts, that number will be more than 96 million.

“We’re quite certain that mobile financial services, especially P2P, will prove to be the single greatest economic development toolkit that the developing world – particularly Africa – has ever seen,” Beccue continues. “They will really move that continent – and other parts of the developing world such as India – forward in a big way.”

Kenya pioneered mobile money services on the African continent, but there are now a large number of other implementations in many countries. Earlier, regulatory constraints hindered development of these services, but they are now less an issue. The real challenge today is putting in place the local “agent networks” that enable such services in many areas: ensuring that they are knowledgeable, reliable, and have sufficient floats.

An important distinction: in the industrialized world, “mobile banking” is an extension of our existing personal and online banking. In contrast, says practice director Neil Strother, “In the developing world, conventional banking infrastructure is very limited, and P2P services are often offered by non-bank service providers.

These provide not only a means for individuals to move money among business partners and family but a more secure repository for savings, all much less susceptible to corruption than most previous alternatives.”