Mobile money has often been hailed as a success story in Africa, with the promise of transforming economies and boosting financial inclusion. However, a closer examination reveals a more nuanced reality. In this two-part series, we explore the actual impact of mobile money in Africa and the challenges it faces in living up to its revolutionary image.

Mobile money services, introduced in African markets in the late 00s, were expected to revolutionize financial inclusion using simple and widespread technology. Safaricom’s M-Pesa, launched in 2007, gained rapid adoption in Kenya, becoming a symbol of success. However, the impact of mobile money varies across different African markets.

While M-Pesa succeeded in Kenya, Afghanistan, and Tanzania, it faced challenges in South Africa and other regions. Attempts to launch M-Pesa as a remittance service in European markets also failed. The success in Kenya was attributed to factors like poor banking penetration, minimal regulation, and Safaricom’s dominance.

Experts suggest that M-Pesa’s success story in Kenya is unique and not easily replicable in other markets. The rise of 3G technology and low-cost smartphones has allowed traditional banks to catch up with mobile money services. The exclusive dominance that operators like Safaricom once had is no longer feasible.

Russell Southwood, CEO of Balancing Act, believes that the window for replicating M-Pesa’s success is closed. The current market conditions, with leading operators having around 40% market share, make it challenging for exclusive mobile money services to thrive without interconnection with traditional banking infrastructure.

The narrative of mobile money promoting financial inclusion remains a significant factor in its popularity. However, as traditional banks reclaim their territory in emerging markets, mobile money services are now more intertwined with traditional banking infrastructure. Mobile operators like MTN and Orange offer mobile money, but their success is linked to integrating with existing banking systems.

Dimitris Mavrakis from ABI suggests that the idea of connecting the unbanked has been discussed since 2010, but the addressable market is now smaller. While there are still unbanked populations, the challenge lies in convincing banks to relinquish control and allow innovative financial inclusion initiatives outside of traditional banking infrastructure.

In the second part of this series, we will delve into the practical usage of mobile money in Africa, exploring issues of trust and examining the technology’s future trajectory.

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