Many reports say that young Africans are less likely to have a bank account than adults in Africa. At the same time, they are more likely to use mobile wallets to make payments online. One of the reasons for this is the limited access to formal financial services in Sub-Saharan Africa. Here is a table comparing the percentage of youth having a traditional bank account and mobile money account.
Formal accounts and savings enable people to avail loans, keep their savings and safeguard against unexpected events such as unemployment, illness, accidents and family emergencies. However, a large proportion of the population in Africa remains unbanked. People, especially youth, face issues due to high fees and long and intimidating processes when it comes to banking services. That is why they choose to manage their finances with digital wallets.
Impact of mobile money
Today, with just a mobile phone, people are able to make instant payments, quickly transfer money to their loved ones, and even pay for groceries. As of December 2018, according to a report by GSMA, two-thirds of total global mobile money transactions were conducted in Sub-Saharan Africa, with the value exceeding $25B.
In East African countries such as Tanzania, Kenya, and Uganda, mobile money is already the youth’s currency of choice. It has enabled African households to be more flexible and allow high savings. A recent study in Kenya shows that the impact of mobile wallet on a household can be substantial. People with access to mobile money (M-PESA in Kenya) during an emergency like unexpected weather conditions or illness were better able to respond better. They were able to manage their expenditure better in response to the event.
Mobile money providers also played a sizable role for African households during the COVID-19 pandemic. They reduced or waived transaction fees to make mobile payments more affordable to encourage online payments and social distancing.
Combining it all together
With all the reports and data available online, it is clear that mobile money is the popular choice for African youth. It is playing a pivotal role in deepening financial inclusion amongst the young generation. But, is it the silver bullet for every financial need? Thankfully, banks and financial institutions are also elevating their game reach deeper into the continent. Improving technology and innovative solutions can help banks and mobile money providers collaborate for better services. With innovation, we aim to offer better services, ease of use, security and a great user experience to the society. Understanding the market needs with the right innovation can help us deliver.
Subscribe to our blog and get the latest updates from Wakandi directly in your inbox. Fill the form below to subscribe.