Could the future of African Banking be in mobile banking? The data from the continent definitely suggests that it will.
The value of Africa’s mobile money transactions edged up 39% to $701.4 billion in 2021 from $495 billion in 2020. According to these numbers, Africa now accounts for 70% of the world’s $1 trillion mobile money value.
Figures released by the Global System for Mobile Association (GSMA) on April 21st show the volume of mobile money transactions jumped 23% to 36.7 billion in 2021 from 27.5 billion in 2020.
In the review period, registered mobile wallets in Africa topped 621 million, a 17% increase from 562 million captured in 2020. There are now over 184 million active mobile money wallets on the continent compared to 161 million accounts just over a year before.
Africa is a forerunner in mobile money
The Head of Financial Inclusion at GSMA, Olson Onyango, thinks that African users are very significant even though mobile money has become a global phenomenon.
“As a result, businesses and individuals alike have benefited from this fast-paced digitization of payments, unlocking access to more products and services, building financial resilience, and bringing about commercial opportunities,” she said as quoted by Quartz Africa.
African mobile money ecosystem is also rapidly diversifying as is the rest of the world, from business-to-consumer (B2C) to Business-to-business (B2B.)
The effects of the pandemic
According to GSMA, the total global transaction value in 2021 was $1.045 trillion, up 31% from 2020.
While the trillion-dollar mark was a long-awaited goal of the industry, the GSMA had initially predicted it would not be achieved until 2023.
But several years of strong growth have prompted earlier forecasts to be revised more than once, due in part to the push for digitization during the covid-19 pandemic.
“Cash-in, cash-out and person-to-person (P2P) payments still account for the bulk of value, but more people in LMICs are living increasingly digital lives thanks to mobile money—paying bills, school fees and a variety of online and offline merchants through mobile money accounts. These different use cases will be examined more closely in the next chapter, the report reads in part.
In what GSMA terms “another landmark,” for the industry, for the first time in 2021, P2P transactions topped $386 billion or more than $1 billion a day.
Fastest Growth Markets for Mobile Money
Transaction values grew fastest in the Middle East and North Africa (49%), sub-Saharan Africa (40%) and Latin America and the Caribbean (39%). This shows that Africa and the Middle East are the fastest growth markets for mobile money globally.
In the coming years, the GSMA projects growth to come from both long-established mobile money markets and markets where mobile money services are still nascent, especially in South Asia and African countries such as Nigeria, Ethiopia, and Angola.
For instance, in 2021, Ethiopia saw the launch of a mobile network operator (MNO)- led mobile money service, and the Central Bank of Nigeria granted Approval in Principle to leading MNOs to run mobile money services in the country.