When you hear the term ‘Mobile Banking’ or ‘Mobile Money’, M-Pesa, Kenya or East Africa comes to mind. This is because mobile banking has been a huge success in this region. Kenya has the largest number of mobile money users per adult population in the world with East Africa accounting for 48.5 million registered users of the 57 million mobile money customers in Sub‑Saharan Africa and 81.8 million mobile money customers in the world.
There are more mobile money accounts than bank accounts in East African countries of Uganda, Kenya and Tanzania, and more than 40% of their adult population have mobile money accounts. These amazing achievements are why they get the spotlight and most of the mobile banking fanfares in Africa.
But what most people don’t know is that away from the spotlight West Africa has created a niche for itself in the industry which it comfortably and uniquely dominates both in Africa and worldwide. Let’s take a look.
West Africa, a region made up of 15 countries is experiencing fast growing mobile technology penetration with 163 million unique subscribers, comprising around 40% of Sub-Sahara Africa subscribers and the region has a mobile penetration rate exceeding the SSA average.
According to GSMA 2016 State of Mobile Money in West Africa Presentation, mobile banking sector in the region is fast growing too. In a period of 5 years (2011 – 2016), the region’s global share of active costumers accounts increased from 1.4 to 38.6 million (6 – 16 %), transaction volumes from 32 to 119 million (2 – 9 %) and transaction values from $93 million to $3.1 billion (2 – 14 %).
There are now more than 3 times as many mobile money users (92m) as Facebook users. The region makes 33.3 % of all active accounts in sub-Saharan Africa today, compared to less than 10 % five years ago and mobile money transaction in the region is dominated by Airtime top-ups (68.2 % by volume and 77% by value) and domestic Phone-to-phone transfer (25.2 % by volume and 6.6 % by value).
Obviously, West Africa lags behind East Africa in number of mobile money account and total transaction in both volume and value, but mobile money International Remittance (IR) transactions in West Africa dwarfs that of East Africa and all other regions of the world.
West Africa’s IR transactions which is very small part (I.2 %) of the total volume of mobile money transactions in the region in 2016, behind all transaction categories excluding Bulk Disbursement (0.6 %), accounts for 62.8 % by volume and 47.6 % by value of global mobile money based IR far above East Africa (19.9% by volume and 22.3 % by value).
West Africa comfortably dominate in the sector. It has 23 live IR corridor connecting 10 countries and 4 out of 10 global services The IR success in the region is driven by low prices, strong cross-border collaborations among Mobile Network Operators (MNOs) which is spreading across the region and West African Economic and Monetary Union (WAEMU) member countries.
The average mobile money IR cost in West Africa is far cheaper than that of traditional money transfer operators by an average of about 60 % and are increasingly been use by economic emigrants in mostly Ivory Coast, Burkina Faso, Mali and Senegal (which share common language and currency, and are all WAEMU members) to send money home across borders.
Interoperability and collaboration created by MNOS in the region should be studied by other regions. There is collaboration between MTN Ivory Coast and Airtel Burkina Faso; and Orange Ivory Coast and Airtel Burkina Faso. Orange also operates cross border transfer service linking Ivory Coast, Mali and Senegal which resulted in Orange money remittances to the value of nearly one-fifth of World Bank reported remittances between those countries (GMSA 2015: State of the Industry Report – Mobile Money).
The dominance of global mobile money based IR by West Africa, despite East Africa’s global dominance in mobile money penetration . suggests that one-size-fits-all is not a good approach in mobile banking because countries and regions tends to respond differently.