Over the past year, global mobile money accounts grew by 13 percent thanks to regulatory changes in Sub-Saharan Africa (SSA), particularly in Nigeria and Ethiopia, a new report has said.
The 2023 State of the Industry Report on Mobile Money by the GSM Association (GSMA), a non-profit industry organisation, showed that registered mobile money accounts rose by 13 percent to 1.6 billion in 2022 from 1.4 billion in 2021.
“Some of the key contributors to the growth of mobile money in the past few years have been regulatory changes in large markets,” Mats Granryd, director general at GSMA, said.
He said in Nigeria, for example, new licenses have seen many new mobile money players emerge, and with this a 41 percent growth in the number of registered agents.
”Not only has this created employment for millions of new agents, but mobile money services are now accessible to more people in Africa’s largest economy,” he added.
According to the report which is published annually by the GSMA and funded by the Bill and Melinda Gates Foundation, Nigeria contributed to the staggering 41 percent increase in the number of mobile money agents to around 17 million last year from 12 million in 2021.
“Much of this growth was in Nigeria where a liberalised regulatory regime has led to an increase in Mobile Money Providers. Agents are an important part of any mobile network service and were responsible for two-thirds of all cash-in transactions in 2022,” it said.
Last year, the World Bank said higher adoption of mobile money drove the growth of account ownership in financial institutions, particularly in SSA countries like Nigeria. The country’s banked population increased by 15.6 percentage points to 45.3 percent in 2021, the highest in 10 years from 29.7 percent in 2011.
“Mobile money has become an important enabler of financial inclusion in Sub-Saharan Africa especially for women as a driver of account ownership and of account usage through mobile payments, saving, and borrowing,” the Bank said in its 2021 Global Findex report.
The GSMA report revealed that West Africa had the highest number of new accounts of all sub-regions worldwide in 2022. “Within West Africa, Côte d’Ivoire, Ghana and Senegal have been mobile money leaders, followed closely by Benin, Burkina Faso and Mali.”
“The introduction of payment service bank (PSB) licenses has also had a significant impact in Nigeria, where mobile money usage has grown steadily,” it said.
Africa’s most populous nation has five established PSBs such as Hope PSB, 9PSB, MTN’s Momo, Airtel’s SmartCash and Glo’s Moneymaster which are already operating across the country.
The number of PSBs is almost at par with India which currently has six active PSBs such as Airtel Payment Bank, India Post Payment Bank, Fino, Paytm Payment Bank, NSDL Payment Bank and Jio Payment Bank.
MTN’s active MoMo PSB wallets rose by 1.2 million in Q1 to 3.2 million, accounting for 43.2 percent of our fintech users. And Airtel aims to target 36.8 percent of unbanked adults through its Smartcash PSB.
In terms of the region in Africa that recorded the most registered mobile money accounts, East Africa had 390 million, followed by West Africa with 290 million accounts.
Central Africa follows with around 65 million accounts; growing six percent during the year, while Southern and Northern Africa have the lowest number of registered users at 18 million each, growing by 16 percent and 15 percent year-on-year respectively.
“In the early years of mobile money growth, East Africa was the powerhouse. The region had the highest activity rate in sub-Saharan Africa in 2020, but this has fallen for two consecutive years.”
“Activity rates in West Africa increased consistently between 2018 and 2022 and are now approaching sub-Saharan African activity rates,” it said.
While it took the industry 17 years to reach the first 800 million customers, it took just five years to reach the next 800 million, according to Max Cuvellier, head of mobile for development at GSMA.
“It is promising to see the continued growth of mobile money worldwide. Mobile money has afforded millions of unbanked and underserved people in low- and middle-income countries access to digital financial services, for the first time,” he said.
Authors of the report highlighted that total transaction value for mobile money grew by 22 percent between 2021 and 2022, from one trillion dollars to around $1.26 trillion – and $832 billion of that came from sub-Saharan Africa, with the African growth rate the same as the global average of 22 percent.
“However, the share of cash-based transactions in the overall transaction mix declined, with cash-in and cash-out transactions dropping nearly two percentage points. This is due to a significant rise in digital transactions, particularly interoperable bank transfers and bill payments,” they said.
The GSMA estimates there are still 1.4 billion people worldwide who remain unbanked, and more work is still needed to help give underserved communities access to safe, secure and affordable financial services.
“It is clear that mobile money is driving financial inclusion around the world. As it continues to grow, it offers an incredible opportunity to reach the 1.4 billion people who still do not have access to financial services,” Granryd added.
He recommends that as countries work towards a sustainable and resilient future in which everyone is connected, it is absolutely vital that they also keep working to design safe and secure financial services for all.