Volume 1 • Issue 8

AfDB
Chief Economist Complex
Africa Economic Brief
December 2010
www.afdb.org

KEY ISSUES
Mobile Banking
• Mobile telephony
in Africa: Taking the Bank
penetration in Africa has
increased exponentially
from less than 2 million
to the People
subscribers in 1998 to over Peter Ondiege*
400 million in 2009.

• Mobile banking offers an

opportunity to serve the
“unbanked”: only 20 percent 1 – Introduction which culminate into exceedingly high
of African families have a cost of providing banking services.
bank account. Improving access to financial services can Ethiopia, Uganda and Tanzania for
• Mobile banking is staging a contribute to transforming peoples’ lives in instance, each have less than one bank
true “revolution” in access developing countries. However, the branch per every 100,000 people
to finance. A mobile phone majority of the ordinary people in these compared to 100 in Spain. This ratio
can serve as:
a virtual bank card; countries still have limited access to these however shows a high disparity across the
a point of sale terminal; services. Today, an estimated 2.7 billion continent, with Namibia having more than
an ATM; people in developing countries have no four, Zimbabwe more than three and
an internet banking terminal.
access to financial services. Over a billion Botswana nearly four bank branches per
• Mobile banking offers more people in Africa, Latin America and Asia 100,000 people.
opportunities for are currently without bank accounts but
partnerships between do have a mobile phone. This number is Sub-Saharan Africa (SSA) has the
banks, non-bank financial
institutions; mobile set to reach 1.7 billion by 20121. lowest deposit institution penetration in
telephony enables MFIs and the world standing at an average of
IFIs to increase access to In Africa, the majority of the population has 16.6% compared to 63.5% in
finance, especially in rural
areas for households and no access to banking services, with only developing countries. 4 This level of
SMEs. 20% of African families having bank penetration gives 166 banks per 1,000
accounts2. For instance, in 2007, only adults for the SSA region. Again there is
about 30% of household in Kenya had a wide variation among countries in
bank accounts; and in Benin, with a SSA, with Guinea-Bissau recording the
population of 7 million had only 35 bank lowest 0.6% and Mauritius the highest
branches in 2006.3 The limited access to of over 210% deposit account
financial services in Africa stems penetration. Most of these deposits in
Mthuli Ncube particularly from deficient infrastructure, SSA are held in commercial banks, with
[email protected] physical-geographical isolation or few exceptions such as in Niger,
+216 7110 2062
inaccessibility, financial illiteracy, all of Burkina Faso, Cote d’Ivoire and Benin
Charles Leyeka Lufumpa
[email protected] * Peter Ondiege is Chief Research Economist in Development Research Department at African Development
+216 7110 2175 Bank, [email protected]
1 Efam Dovi, 2008, ‘Boosting Domestic Savings in Africa’, Vol. 22, No. 3, www.un. To invest more, countries

Leonce Ndikumana must tap assets now outside the banks , www.un.org/ecosocdev/geninfo/afrec
2 Same as Foot Note 1.
[email protected] 3 Mwangi Kimenyi and Njuguna Ndungu, 2009 October, Expanding rhe Financial Services Frontier: Lessons
+216 7110 2076
From Mobile Phone Banking in Kenya, Brookings, www.brookings.edu/media
4 Financial Access 2010, SSA Factsheet, CGAP-World Bank, www.cgap.org/financialindicators

A f r i c a n D e v e l o p m e n t B a n k
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Volume 1 • Issue 8 • December 2010 • www.afdb.org

which have more deposits in India it rose from 0.12 per 100 to 44.7 per
microfinance institutions (MFIs), and 100 people. In this period, Africa also
Burundi in cooperatives and credit witnessed a significant increase from 0.53
“It is this gap in the financial unions. Even Africans with bank per 100 people to 42.82 per 100 people.5
services market that is accounts often face high charges for Many African countries also experienced
creating a unique niche for moving their cash around, due to high robust increase in mobile penetration
mobile phone banking to transactions costs. It is this gap in the during 2003 and 2009: from 45.4 per
develop on the continent,
financial services market that is creating 1000 people in 2003 to 937.94 per 1000
enabling a growing number of
people to access financial a unique niche for mobile phone in 2009 in Algeria; from 248.09 per 1000
services for the first time” banking to develop on the continent, to 961.19 per 1000 in Botswana; from
enabling a growing number of people to 359.88 per 1000 to 926 per 1000 in South
access financial services for the first Africa; and from 46.80 per 1000 to 486.52
time. per 1000 in Kenya during the same
period,6 At the same time, the average
In this context, new technology-based price of a ‘2G handset’ decreased from
financial services, such as mobile phone USD150 in 2003 to USD75 in 20087. The
“Subscribers can now open banking and the use of smartcards, annual growth rates of mobile phone
accounts, check their
have the potential to substantially penetration in the developing world has
balances, pay their bills,
transfer money, and cater for increase people’s access to finance. In ranged between 30% and 50% or higher,
their daily basic needs” South Africa, the DRC, Zambia and and penetration has been rapidly
Kenya for instance, mobile phone increasing.8
banking is taking services to remote
areas where conventional banks have The rapid development in Africa’s ICT
been physically absent. Subscribers can sector, particularly mobile telephony is
now open accounts, check their sending a strong message about the
balances, pay their bills, transfer money, continent’s potential to innovate. Africa is
and cater for their daily basic needs. now considered as the fastest emergent
Mobile phones are also being used now continent in the ICT sector growth. Mobile
for other public services such as phone penetration has exploded since
monitoring elections and delivering 2000 (Figure 1). Most of the operators in
public health messages. this market are local firms. In 1998 there
were less than 2 million mobile phone
In the past 30 years, three (3) products users in Africa. The number has grown to
“In 1998 there were less than
2 million mobile phone users that are seen to have had the most impact over 400 million in 20099 (Table 1, and
in Africa” on the world are in the ICT sector: the Annex 1). The compounded annual
internet, PCs and mobile phones. growth rate is around 2000% over a
Ofthese, the mobile phone has the highest decade and there is still potential for
penetration in developing countries. For further growth.
instance, between 1998 and 2009, mobile
phone penetration in China increased from However, the mobile telephony industry
1.92 per 100 people to 55.9 per 100; in still faces a number of challenges.

5 Jerry Hausman, “Mobile phones in developing Countries”, May 2010, www.crei.cat/conferences/cornucopia/

confpapers; and ITU, World Telecommunication/ICT Indicators Database 2010, 1th Edition.
6 See Annex 2.
7 Jerry Hausman, ibid.

8 Jerry Hausman, ibid.

9 www.worldbank.org/connectafrica.

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Volume 1 • Issue 8 • December 2010 • www.afdb.org

Figure 1: Africa - Mobile cellular telephone subscriptions (Thousands)

450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: International Telecommunication Union, World Telecommunication/ICT Indicators Database 2010, 14th Ed.

Penetration rates (mobile subscriptions taxes, which in some countries such as

per 100 people) vary from under 10% in Tanzania and Uganda can be as high as
Ethiopia to nearly 100% in Gabon, with an 30% of overall charges.
average of about 33% for the whole “The mobile phone revolution
continent.10 The mobile phone revolution This brief seeks to examine how the boom continues to leave large parts
continues to leave large parts of the in mobile phone usage in Africa can be of the continent behind”
continent behind. While countries like tapped to accelerate the provision of
South Africa (88%) and much of North financial services with illustration from
Africa (e.g., Algeria 81%) are approaching Kenya and South Africa. It illustrates how
100% mobile penetration, in Ethiopia, mobile phone innovation is providing e-
Burundi, the Central African Republic, banking services to the ordinary people
Eritrea and Rwanda it is less than 7%. Low and offering a diverse range of financial
incomes, illiteracy and ‘large signal black services, especially to the unbanked
spots’ are key obstacles to the acquisition people. It further discusses how access to
and use of mobile phones. These this new technology may promote financial
obstacles are further aggravated by high sector deepening in the continent.

10 The mobile phone ‘revolution’ in Africa: Rhetoric or reality? Sebastiana Etzo and Guy collender,
http://afraf.oxfordjournals.org/content/109/437/659.extract

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Volume 1 • Issue 8 • December 2010 • www.afdb.org

Table 1: Africa - Mobile cellular telephone subscriptions (post-paid + prepaid) (Thousands)

Country 2003 2009 Annual Growth

rates %(2003-2009)
Algeria 1,446.90 32,729.80 68.17
Angola 350.00 8,109.40 68.84
Benin 236.20 5,033.30 66.51
Botswana 445.00 1,874.10 27.08
Burkina Faso 238.10 3,299.00 54.98
Burundi 64.00 838.40 53.54
Cameroon 1,077.00 7,397.20 37.87
Cape Verde 53.30 392.00 39.45
Central A Rep. 40.00 168.00 27.02
Chad 65.00 2,686.00 85.94
Comoros 2.00 100.00 91.94
Congo 330.00 2,171.00 36.89
Dem. Rep. of Congo 1,246.20 10,163.40 41.88
Cote d'Ivoire 1,280.70 13,345.90 47.79
Djibouti 23.00 128.80 33.26
Egypt 5,797.50 55,352.20 45.65
Equatorial Guinea 41.50 445.00 48.50
Eritrea ... 141.10 ....
Ethiopia 51.30 4,051.70 107.13
Gabon 300.00 1373.00 28.85
Gambia 149.30 1433.00 45.78
Ghana 795.50 15,108.90 63.34
Guinea 111.50 5,607.00 92.12
Guinea-Bissau 1.30 560.30 174.84
Kenya 1,590.80 19,364.60 51.67
Lesotho 126.00 661.00 31.82
Liberia 47.30 842.00 61.59
Libya 127.00 5,004.00 84.47
Madagascar 283.70 5,997.40 66.28
Malawi 135.10 2,400.00 61.53
Mali 247.20 3,742.00 57.28
Mauritania 351.00 2,182.20 35.60
Mauritius 462.40 1,086.70 15.31
Morocco 7,359.90 25,310.80 22.86
Mozambique 435.80 5,970.80 54.69
Namibia 223.70 1,217.00 32.62
Niger 82.40 2,599.00 77.75
Nigeria 3,149.50 73,099.30 68.89
Rwanda 130.70 2,429.30 62.75
Sao Tome & Principe 4.80 64.00 53.99
Senegal 782.40 6,901.50 43.74
Seychelles 49.20 92.30 11.06
Sierra Leone 113.20 1,160.00 47.38
Somalia 200.00 641.00 21.42
South Africa 16,860.00 46,436.00 18.39
Sudan 527.20 15,339.90 75.38
Swaziland 85.00 656.00 40.58
Tanzania 1,942.00 17,469.50 44.21

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Country 2003 2009 Annual Growth

rates %(2003-2009)
Togo 243.60 2,187.30 44.17
Tunisia 1,917.50 9,753.90 31.14
Uganda 776.20 9,383.70 51.50
Zambia 241.00 4,406.70 62.31
Zimbabwe 363.70 2,991.00 42.07
Africa 53,003.50 441,897.60 42.40

Source: International Telecommunication Union, World Telecommunication/ICT Indicators Database 2010, 14th Ed.

2 – Mobile Banking regard, mobile banking can be used to

and Access to Finance provide financial services to the unbanked.
in Africa
“For the banks, the main
Financial institutions and mobile phone advantages of the mobile
Banks are recognizing the potential of service providers are introducing phone lie in its capabilities to
reaching millions of prospective resourceful methods of bringing these reach everywhere”
customers, especially the rural population unserved populations into the formal
who account for more than 60% of economy using mobile phones. For the
Africa’s total population and have no banks, the main advantages of the mobile
access to banking services. The rural phone lie in its capabilities to reach
commercial bank branch network is still everywhere. Its power is in transforming
underdeveloped (Table 2). However, since the economics of service delivery,
“It also offers other
more than 50% of the adult population in especially by reducing the costs of
advantages such as
Africa has access to mobile telephone, financial transactions11. immediacy, security and
mobile banking could enable the rural efficiency”
population to have access to financial Mobile banking is a powerful way to deliver
services as demonstrated by the case of savings services to the billion people
Kenya and South Africa. worldwide who have a cell phone but no
bank account. It has a number of
The cost of formal banking in Africa is advantages over traditional banking
high; in some countries the minimum methods as it breaks down geographical
deposit can be as high as 50% of per constraints; it also offers other advantages
capita GDP. In addition, internet and such as immediacy, security and efficiency.
broadband subscription are still low These advantages, some of which can be
(Annex 1), making internet banking out of quite practical under remote field
reach for most of the population. In this conditions are briefly highlighted below.

11 I. Mas and K. Kumar (2008), “Banking on Mobiles: Why, How, and for Whom?” QCGAP, No. 48.

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Table 2: Bank Presence in Rural Areas in Africa

Number of branches in rural area*

Country 2004 2009 Growth (2004-2009) (%)
Algeria 28 128 357.1
Angola 0 0 …
Botswana 276 350 26.8
Cameroon 20 24 20
Chad 2 2 0
Comoros 50 92 84
Equatorial Guinea 0 0 …
Ethiopia 32 2662 8218.8
Gabon 5 8 60
Kenya 1133 2056 81.5
Lesotho 0 10 …
Libya 359 389 8.4
Madagascar 860 1166 35.6
Mauritania n.a 1 n.a
Mauritius 186 268 44.1
Mozambique 394 90 -77.2
Namibia 0 0 …
Rwanda 19 556 2826.3
Seychelles 20 22 10
Sierra Leone 12 31 158.3
Swaziland 0 45 …
Tanzania 12 46 283.3
Uganda 287 416 44.9

Source: WDI 2010, CGAP Report data 2010

*Number of Bank branches in rural area = Total Number of branches in country – Number of branches in urban area

First, the mobile phone can serve as a and communicate with the appropriate
virtual bank card where customer and financial institution to solicit transaction
“A POS is used to pay for institution information can be securely authorization. This is the same functions
goods or services at the stored, thereby avoiding the cost of of a POS terminal at malls, retail, or other
store”
distributing cards to customers. In fact, stores. A mobile phone can duplicate this
the subscriber identity module (SIM) card functionality with ease.
inside most if not all GSM phones is in
itself a smartcard (similar to the virtual Third, the mobile phone can also be used
bank card). Thus, the bank customer’s as an ATM. A POS is used to pay for
PIN and account number can be stored goods or services at the store. If we
on this SIM card to perform the same consider cash and access to savings as
functions as the bank virtual card. “good and services” that customers buy
at the store, then that POS will also serve
Second, the mobile phone may serve as as cash collection and distribution point
a point of sale (POS) terminal. As such a which basically is the function of an
mobile phone may be used to transact automatic teller machine (ATM).

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Fourth, the mobile phone may be used as The number mobile telephony
an Internet banking terminal. This subscribers, which stood at 4.5 million in
providing two fundamental customer 2005, grew by 34.2% to 17.4 million in
services: a) instant access to any account; 2009 from 12.9 million in 2008.13 It is “This compares favorably
and b) the ability to make payments and estimated to be more than the 20 million in to the current 4.5 million
transfers remotely. As such, the mobile 2010. The mobile telephony capacity has customers of the existing
phone device and wireless connectivity also increased from 6.8 million in 2005 to financial institutions in
Kenya”
bring the Internet terminal into the hands 29.0 million in 200914.
of otherwise unbanked customers.
M-PESA - The M-PESA mobile money
3 – M-Banking Success transfer service, in was launched in 2007
Stories in Africa with 900,000 subscribers15, now has
about 12 million customers (in 2010). The
3.1 The Case of Kenya number of M-PESA clients grew by 61%
from 7.38 million in July 2009 to 11.89 “It is estimated to be more
Only 19% of the adult population in Kenya million in July 2010, which is about 30% than the 20 million in 2010”
has access to a formal bank account12 of Kenya’s population16. This compares
and banking services in Kenya are largely favorably to the current 4.5 million
restricted to urban populations. Cellular customers of the existing financial
operators are providing banking services institutions in Kenya.17 There were 19,500
in the country with M-PESA and M- M-PESA agents as at the end of July 2010
KESHO by Safaricom and ZAP by Zain. compared to 1,200 in 2007.

Figure 2: Increasing Trend of Mobile Banking in Africa

14
11.89
12
10
No.Subscribers(million people)

7.38
8
6
4
2 0.9
0
2007 2009 2010
Year

12 Ignacio Mas and Dan Radcliffe, Bill and Belinda Gates Foundation, 2010 March, Mobile Payments go Viral:
M-PESA in Kenya.
13 Kenya, Economic Survey 2010.

14 Kenya, Economic Survey 2010.

15 T. Omwasa, 2009, M-PESA : Progress and Prospects, Innovations Case Discussions,

http://www.strathmore.edu/pdf/innov-gsma-omwansa.pdf
16 In July 2010 alone, about 1.7 million new M-Pesa subscriptions in Kenya were recorded.
17 Melida and Gates Foundation,Global Development Program, Nov 2010, “Financial Services for the Poor:

Srategic Overview”, www.gatesfoundation/financialservicesfor thepoor.

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M-PESA services have evolved with time technological innovation, has been
and now organizations are able to pay supported by a conducive policy
“M-PESA financial services
employee salaries using the Bulk Payment environment and the appropriate oversight
have low value and high
volume, and are generating function while mobile phone users are able by the Central Bank of Kenya.
both significant returns and to transfer money and pay for their utility
job opportunities” bills using the service. The number of M- In October 2010, Safaricom and Barclays
PESA monthly transactions increased Bank of Kenya signed a partnership,
from 0.35 million in July 2007 to 16.75 which allows Barclays account holders to
million in July 2009, and the monthly value deposit and withdraw to and from their M-
rose from USD14.2 million in July 2007 to PESA accounts. The M-PESA agents who
USD536.6 million in July 2009.18 As at the bank with Barclays Bank will also be able
end of July 2010, the service had to purchase e-float for their daily
“The M-PESA agents who
transferred Sh525.84 billion (about USD operations. This is the eighth bank, after
bank with Barclays Bank will
also be able to purchase e- 6.62 billion) since its inception in 2007 and Family Bank and Kenya Commercial Bank
float for their daily the monthly average amount of money among others, to partner with M-PESA
operations” moved through the system has increased either as an agent or a super agent,
by 30%. While the amounts of cash being denoting the growing co-operation
transferred are often small, the sheer between the mobile money services and
volume of business results in large overall mainstream banks.
movement of funds in the network. As at
January 2010, cash deposits and In addition, Vodafone partnered with
withdrawal transactions at M-PESA Vodacom in Tanzania and Roshan in
outlets amounted to USD650 million per Afghanistan in 2008 as well as with
month while the average transaction was Nedbank in South Africa in 2010 targeting
only about USD33.19 13 million customers in South Africa alone
to unveil an M-PESA mobile-based cash
M-PESA financial services have low value transfer services in these markets.
and high volume, and are generating both
significant returns and job opportunities. M-PESA International Money Transfer
The services carry a minimum cost of Product (IMT) - The M-PESA IMT service
about USD 0.46 (KES35) per is an additional functionality to M-PESA,
transaction. On average, transaction
20 together with Vodafone, that provides
costs of bank services in Kenya are high financial services between Kenya and the
USD1 to USD3 compared to M-PESA’s UK. M-PESA has partnered with selected
USD 0.12 to USD0.15.21 The value of M- agents in the UK - Western Union,
PESA transactions was about 0.17% of Provident Capital, and KenTV. The
commercial bank deposit in July 2007, maximum amount that can be sent at any
increasing to 4.36% in 2009.22 The growth one time via M-PESA is ₤250, while
of mobile banking in Kenya, and in customers in UK can send a maximum of
particular M-PESA financial services ₤1000 per month. Charges for sending

18 Mwangi Kimenyi and Njuguna Ndungu, 2009 October, Expanding rhe Financial Services Frontier: Lessons
From Mobile Phone Banking in Kenya, Brookings, www.brookings.edu/media
19 Ignacio Mas and Dan Radcliffe, Bill and Belinda Gates Foundation, 2010 March, Mobile Payments go Viral:

M-PESA in Kenya.
20 Mwangi Kimenyi and Njuguna Ndungu, 2009 October, ibid.

21 Melida and Gates Foundation,Global Development Program, Nov 2010, ibid.

22 Mwangi Kimenyi and Njuguna Ndungu, 2009 October, ibid.

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money from UK vary between ₤4 and which for the first time allowed banks to
₤6.90, for sending up to ₤250, which are engage a wide range of retail outlets for
only about 25% to 40% of the transfer transaction handling and product
fees charged by traditional money transfer promotion. This paved the way for banks
channels such as Western Union. to begin utilizing the M-PESA platform
and associated network of M-PESA
In August 2009, Safaricom was authorized outlets as a channel.
to transact foreign exchange business by
the Central Bank of Kenya (CBK) while the M-KESHO accounts, like the M-PESA,
UK partners were authorized by the UK have no account opening fees, minimum
Revenue & Customs (HMRC) to transact in balances or monthly charges. M-KESHO “M-KESHO accounts earn
international remittances. Following the accounts earn interest and have no limit interest and have no limit on
account balances”
successful pilot and launch of M-PESA IMT on account balances. Other features of
between UK and Kenya, Safaricom will be the account include microcredit facilities
expanding the services to allow remittances (emergency credit availed through M-
to Kenya from other relevant markets, PESA), micro insurance facilities as well
starting with East African countries. as a personal accident cover that
translates into a full cover after 1 year. M-
M-KESHO - The latest partnership KESHO clients can open accounts at
between Equity Bank and Safaricom to either Equity Bank branches or at a
launch the M-KESHO account is the subset of some 5000 M-PESA agents at
perfect showcase of convergence which Equity Bank will place a bank
between the mobile phone and banking. representative and transact at any of the
This convergence has the potential of 17,000 M-PESA retail outlets. The
bringing over 18 million Kenyans into technology program at the Consultative
formal banking services. Group to Assist the Poor (CGAP), which
is co-funded by the Bill & Melinda Gates “The move coincided with the
linking of the world’s first
In 2007, there were about 2.5 million bank Foundation, and the UK DFID is
borderless mobile service
accounts in Kenya, increasing to about 8 supporting Equity Bank to deliver ‘One Network’ across two
million accounts in July 2010 (of which 4.5 savings accounts to the poor, unbanked continents”
million are with Equity Bank). In addition people.
there are 9.5 million M-PESA (representing
to 40% of Kenya’s adult population23), a ZAIN ZAP - In August 2008 all Celtel
third of which are held by people that are operations were rebranded to Zain. The
otherwise unbanked. Equity Bank is move coincided with the linking of the
targeting these 3 million M-KESHO world’s first borderless mobile service
customers by the end of 2010. ‘One Network’ across two continents.
Zain operates in 16 African countries
The Central Bank of Kenya issued new serving more than 42.15 million
agent banking regulations in April 2010, customers (as of end December 2009).24

23 Ignacio Mas and Dan Radcliffe, Bill and Belinda Gates Foundation, 2010 March, Mobile Payments go Viral:
M-PESA in Kenya.
24 Burkina Faso, Chad, DRC, Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger,

Nigeria, Sierra Leone, Tanzania, Uganda and Zambia (and Sudan which falls under the Middle East umbrella).
Zain is the market leader in 12 of the 16 African countries in which it currently operates.
25 T. Michael Testi , Zain launches Zap Mobile Banking, targets 100Mn customers, http://www.itu.int/ITU-

D/ict/newslog/Zain+Launches+Zap+Mobile+Banking+Targets+100Mn+Customers.aspx.

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In February 2009, Zain launched ZAP M- 3.2 Mobile Banking

banking service25 in East Africa, allowing in South Africa
customers to send and receive money
“It is targeting over 100 directly to their mobile handsets from South Africa is by far the country where
million people in Kenya, banks anywhere in the world. It is mobile banking is most widely used on the
Tanzania and Uganda” targeting over 100 million people in continent. By end of March 2009, the total
Kenya, Tanzania and Uganda. In mobile customer base in South Africa
September 2009, ZAP expanded mobile increased by 3.8% from 2008 to over 51.9
banking service run in partnership with million with the mobile penetration rate
CitiBank and Standard Chartered Bank. rising to 107%27.
“Nearly 40% are either ZAP allows subscribers to withdraw
unemployed or work informal cash, pay for goods and services, and About half of South Africa citizens don’t
jobs paid in cash”
make money transfers to third parties. have bank accounts. Nearly 40% are
More than 10 million subscribers are either unemployed or work informal jobs
already using these services within East paid in cash. Bank charges are high and
Africa. In January 2010, Zain expanded banking regulations are so strict – such as
its ZAP mobile commerce service to proof of regular income – that they prevent
Niger, Sierra Leone and Malawi, as it many poor people form having formal
seeks to capitalize on a growing demand bank accounts. Moreover, most South
for services such as mobile remittances Africans live in rural or semi-urban areas
and transfers in Africa. Zain is working where access to a bank is very limited or
with National Bank of Malawi and NBS non-existent. Compared to other middle
Bank in Malawi, EcoBank in Niger, and or high income countries in other
Zenith Bank in Sierra Leone. ZAP is part continents, South Africa has low branch
of Zain's ‘One Network' platform, and ATM penetration (Table 3). In contrast,
allowing roaming customers to use the South Africa is the most important
service in all six countries where it is emerging market in terms of mobile
currently available and opening up banking potential. Some examples of
mobile commerce services to about 150 major mobile banking companies in South
million people in Africa26. Africa are given below.

Table 3: Bank Penetration in South Africa and other Countries

Country Branches per 100,000 ATMs per 100,000

people people
Belgium 53.1 67.1
Brazil 15.6 17.8
Portugal 51.6 109.1
South Africa 6 17.5
Spain 95.9 126.6

Source: Source: Financial Access 2009

26 Roger Field, Zain targets African mobile commerce, http://www.itp.net/578761-zain-targets-african-mobile-

commerce.
27 www.companiesandmarkets.com/Summary-Market-Report/south-africa-telecommunications-report-q4-

2009, South Africa Telecommunications Report Q4 2009.

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 Africa Economic Brief AfDB
Chief Economist
Complex

Volume 1 • Issue 8 • December 2010 • www.afdb.org

First National Bank (FNB) of South electricity through a network of over 42

Africa - The FNB has the largest mobile 000 home shops. The home shops,
banking customer base in South Africa. equipped with Shared-phone ATMs,
Currently, it has over 2 million customers enable communities to withdraw, deposit
and attracts about 90,000 on a monthly or borrow small amounts of cash from
basis. In 2009, FNB mobile banking their local township residence. The “Wizzit is expected to expand
customers made 56 million transactions shopkeeper, as the banker, transacts into other African countries
as well and it already has
worth the value of ZAR7.2 billion. The using a GSM enabled device supplied by
been approached by potential
success of FNB stems from its ability to Shared-phone. “Take it Eezi” not only partners from Kenya,
allow customers to send money to anyone provides a vending solution but also Botswana, Namibia, Zambia,
in South Africa. Receivers do not need to assists unbanked clients to have access and Malawi for joint ventures”
have a bank account with FNB. They can to financial services. It has already created
withdraw their money from any FNB ATM 15,000 jobs in township and rural areas in
at no charge. Moreover, they can South Africa.
withdraw all or part of their money, which
they can leave in a Wallet. Money in the The MTN Banking MobileMoney
Wallet gives senders and receivers access Account - This Account gives clients
to other services, such as buying airtime complete access to banking flexibility.
or transferring money to a third party. Providing access to client account from
anywhere in the world, and at any time,
WIZZIT Scheme - Established in 2004, MobileMoney puts customers in control of
Wizzit in South Africa (like M-Pesa in their finances through a secure connection
Kenya) has signed up 50,000 customers using MTN cellphone.
in the country and 250,000 at the end of
2008, and has launched pilot projects in South Africa's MTN in 2010 announced
Zambia where it intends to expand. Wizzit plans for a fully-fledged bank account on
is expected to expand into other African mobile phones, with an optional credit
countries as well and it already has been card. The service will be extended to the
approached by potential partners from 20 countries where MTN operates,
Kenya, Botswana, Namibia, Zambia, and including Uganda, Nigeria, Cameroon and
Malawi for joint ventures. South Africans Ivory Coast, which combined have over
often paid couriers the equivalent of 90 million mobile phone users.
USD30–50 per transaction to deliver cash
to relatives. Now they can do it for only Vodacom - Nedbank M-PESA - South
USD0.50 through Wizzit mobile bank Africa’s largest mobile phone operator
networks. Vodacom has teamed up with Nedbank to
unveil an M-PESA mobile-based cash
Flash Mobile Cash by Eezi - Known as transfer service, similar to the successful
Flash Mobile Cash, the service gives home one operating in Kenya. It will initially allow
shop owners the tools to be the bank for users without access to bank accounts to
communities where formal banking transfer money using handsets and
infrastructure does not exist. “Take it Eezi” eventually pay bills and buy goods.
has developed a local vending solution in Thanks to mobile phone giant Vodacom,
the rural areas in South Africa and has also and its money transfer service M-PESA,
expanded into co-operative banking. The poorer South Africans may finally be able
company provides community service, to save, pay bills, and send cash.
payphones, and sells airtime and However, in South Africa, which is a much

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AfDB Africa Economic Brief
Chief Economist
Complex

Volume 1 • Issue 8 • December 2010 • www.afdb.org

more developed economy, there are many • Increased money transfers from the
other services that currently fill that void. diaspora at low costs – e.g., M-PESA
Thus M-PESA in South Africa, will IMT.
complement existing similar services, from • Reduction in financial transactions
cash-transfer windows at grocery stores costs, leading to lowering cost of doing
to Western Union. business that will benefit SMEs and
overall private sector development.
4 – Challenges, Lessons • Increased government revenues as a
“Such a transformation and Opportunities result increased corporate revenues
is of interest not only for from booming m-banking, improved
banks and MFIS” The high growth and penetration rates of corporate earnings, etc.
mobile telephony that is transforming cell
phones into banks in pockets in Africa is The mobile phone is becoming much
providing opportunities for countries on more than a phone to the poor and the
the continent to increase affordable and unbanked populations of Africa. It is
cost effective means of bringing on board transforming people’s handsets into
the large numbers of the population that “banks” in their hands or pockets.
“Given the successful stories
has been excluded from formal financial Although there are challenges that a
in Kenya and South Africa, m-
banking services are likely to services for decades. Such a number of people are encountering in
reduce by more than half the transformation is of interest not only for terms of high costs and low penetration of
number of the unbanked banks and MFIS but also for governments mobile phones, these can be addressed
African population” and financial regulators as well as by the authorities through policy reforms
development partners who are providing and scaling up investment in the ICT
support to improve the livelihood of African sector. The lessons from the cases of
people through poverty reduction and Kenya and South Africa clearly
sustained economic growth. demonstrate that there are colossal
opportunities for private investment in the
Given the successful stories in Kenya and sector, which will increase access to
South Africa, m-banking services are likely financial services to the majority of African
to reduce by more than half the number of populations through expanded mobile
the unbanked African population, create phone banking services.
jobs and support the growth of SMEs in
the near term. If the trend were to be Partnership between banks, financial
sustained and adopted in a number of institutions, MFIs and the mobile industry
African countries. Service providers like players should be sought out and
Vodacom, Zain and MTN which have wide encouraged. In order to sustain the
continental coverage would be growth of these success stories in these
instrumental in pushing this agenda countries and the rest of African
forward. Successful adoption of, for countries, there is need to support a
instance, Safaricom M-PESA and M- single integrated framework (between
KESHO, and MTN MobileMoney models, financial institutions and mobile industry)
by other service providers in Africa would to cut costs in order to provide
also provide other benefits such as: consumers with the convenience of
banking from home, the farm or other
• Boosting domestic savings through remove areas. MFIs should upgrade their
expansion of financial services to the technology to be able to adopt the new
poor and rural populations. mobile banking emerging technology and

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Chief Economist
Complex

Volume 1 • Issue 8 • December 2010 • www.afdb.org

should seek solutions that are user- cost-effective and economically efficient
friendly and easy to implement. The method of providing financial services to a
increased access to cell phones by the wide segment of the African populations
unbanked Africans would be the most in the very near future.

ANNEX TABLES
Annex 1: Access to Banking Services, Mobile Phone and ICT, 2007

Country Number of Mobile phone Telephone Broadband

Depositors per subscribers mainlines (per subscribers (per
1,000* (per 1,000 people) 1,000 people) 1,000 people)
Algeria
Angola 111 283 5 1
Botswana 883 612 73 2
Cameroon 49 245 10
Central African Republic 2 30
Chad 6 85
Comoros 376 64
Djibouti 49
Equatorial Guinea 46 343
Ethiopia 121 15 11 0
Gabon 53 822 19 1
Ghana 522 332 16 1
Kenya 331 302 7 0
Lesotho 286 227
Madagascar 81 119 7 0
Mauritius 2104 737 286 49
Morocco 801 649 78 15
Namibia 228 385 66 0
Rwanda 162 67 2 0
Sao Tome and Principe 234 190 48 2
Seychelles 794 909 267 41
Sierra Leone 36 143
South Africa 1065 884 95 8
Swaziland 574 330
Tanzania 182 202 4
Uganda 145 137 5 0

Source: WDI 2010, CGAP Report data 2010

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Chief Economist
Complex

Volume 1 • Issue 8 • December 2010 • www.afdb.org

Annex 2: Africa - Mobile cellular telephone subscriptions per 1000 inhabitants

Country 2002 2005 2009 Annual Growth rates

(2002-2009) %
Algeria 14.3 415.8 937.9 81.78
Angola 9.2 96.9 438.4 73.67
Benin 30.8 75.8 563.3 51.47
Botswana 187.5 306.6 961.2 26.30
Burkina Faso 8.9 46.1 209.4 57.01
Burundi 7.7 20.7 101 44.44
Cameroon 42.2 126.4 378.9 36.83
Cape Verde 94.4 171.2 775.3 35.10
Central AR 3.2 24.4 38 42.40
Chad 3.8 21 239.7 80.77
Comoros ... 25.2 147.9 …
Congo 69.8 163.4 589.4 35.63
Dem. Rep. of Congo 10.4 46.5 154 46.96
Cote d'Ivoire 56.8 122.1 633.3 41.13
Djibouti 19.7 54.7 149 33.52
Egypt 61.7 176.6 666.9 40.50
Equatorial Guinea 57.1 159.2 658 41.79
Eritrea ... 9 27.8 …
Ethiopia 0.7 5.5 48.9 83.43
Gabon 216.7 538 931.1 23.15
Gambia 71.9 162.2 840.4 42.08
Ghana 18.9 131.2 633.8 65.17
Guinea 10.4 20.5 556.9 76.59
Guinea-Bissau ... 67.1 347.9 …
Kenya 35.8 128.8 486.5 45.17
Lesotho 71.2 125.2 319.8 23.94
Liberia 1.6 48 213 101.12
Libya 12.6 337.7 779.4 80.27
Madagascar 10.1 29 305.6 62.76
Malawi 6.8 30.8 157.2 56.62
Mali 4.2 64.4 287.6 82.90
Mauritania 89.8 249.8 663.2 33.06
Mauritius 285.1 524.5 843.6 16.76
Morocco 210.2 406.4 791.1 20.84
Mozambique 13.2 72.2 260.8 53.15
Namibia 79 223.4 560.5 32.30
Niger 4.9 24.7 170 65.97
Nigeria 12 131.9 472.4 69.00
Rwanda 9.6 24.8 243 58.66
Sao Tome & Principe 13.6 78.3 393.2 61.71
Senegal 53 153.4 550.6 39.71
Seychelles 545.2 711.6 1095.6 10.48
Sierra Leone 14.8 ... 203.6 45.43
Somalia 12.8 59.8 70.2 27.52
South Africa 296.6 706.4 926.7 17.67
Sudan 5.2 47.2 362.9 83.40
Swaziland 61.7 177.9 553.6 36.81
Tanzania 16.9 86.9 399.4 57.11
Togo 29.7 72.37 330.48 41.09

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Chief Economist
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Volume 1 • Issue 8 • December 2010 • www.afdb.org

Country 2002 2005 2009 Annual Growth rates

(2002-2009) %
Tunisia 59.7 575.1 949.6 48.47
Uganda 15.1 45.8 286.9 52.29
Zambia 12.7 80.9 340.7 59.99
Zimbabwe 27.1 51.9 238.8 36.46
Africa 43 150.3 438.2 39.33

Source: International Telecommunication Union, World Telecommunication/ICT Indicators Database 2010, 14th Ed.

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 AfDB Africa Economic Brief
Chief Economist
Complex

Volume 1 • Issue 8 • December 2010 • www.afdb.org

© 2010 - AfDB - Design, External Relations and Communication Unit/YAL

The views expressed in the Africa Economic Brief are those of the authors and do not necessarily represent the views
of the African Development Bank, the Board of Governors, the Board of Directors or the Governments they represent.

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