Rise of Mobile Banking
This is why mobile money has been booming in the region. Indeed, services like M-Pesa in Kenya, Wizzit in South Africa, or Celpay in Zambia are flourishing here like probably nowhere else in the world. In 2020, there were 548 million mobile money accounts registered in sub-Saharan Africa, with the total number of transactions going up to $490 billion.
Using these services is fairly simple: you would need an ID for verification and a cellphone. Millions of Africans use mobile for daily microtransactions, e.g., to pay for their groceries, cover bills, or send money to family, friends, and even small businesses.
Sounds like a solution? I’m afraid, not quite so. First, quite a lot of people here do not possess any ID and therefore have no access to mobile money. Second, the region is still battling severe hyperinflation, which goes up to two or even three digits in some countries. And third, the cost of cross-border transfers for those who work abroad is high.
So there’s no surprise that crypto solutions are wildly popular in the region. Borderless, accessible from anywhere in the world, with no bank fees or conversion, and stabler than many local currencies, cryptocurrencies help local economies and make them more resilient. Despite the warnings of most governments, they are widely used for P2P transfers, commerce, and hedging against inflation, while countries like Nigeria, South Africa, and Kenya are leading the race.
By the looks of it, crypto can be a real game-changer in the region. There are a few issues that need to be addressed, though. One is the dire need for regulations. Historically, Africa is the birthplace of numerous con schemes (including the infamous Nigerian scams), and financial literacy here is very low, so the risks are high. Another is the low rate of internet usage: most parts of Africa still have no access to the network. And finally, there’s the no-ID problem.
Let’s brainstorm: can we solve these problems today? In which way does the tech need to be advanced to do so in the future?