How East Africa can build financial resilience through mobile money

The landscape of financial transactions in East Africa has been rapidly evolving with the advent of mobile money services. According to a report by GSMA, the number of mobile money accounts in sub-Saharan Africa saw a significant increase in 2019, with 50 million Africans creating mobile money accounts via their mobile phones, marking a 12% rise from the previous year. In Kenya alone, data from the Central Bank indicates that more than 6.5 million new mobile money accounts were registered in the 11 months leading up to November 2020, bringing the total number of mobile money accounts in the country to over 65 million. These numbers underscore the growing importance of mobile money in the region as a tool for financial inclusion and resilience. Economic Analyst, Reginald Kadzutu, sheds light on how mobile money has become a key player in facilitating financial transactions amidst the COVID-19 pandemic and its implications for the future of the digital economy in East Africa. Kadzutu emphasizes that the restrictions and social distancing measures imposed due to the pandemic have accelerated the adoption of mobile payments, with central banks waiving fees to encourage the use of mobile money platforms. This move has not only aided individuals in the informal sector to accept mobile money payments but also ensured the continuity of trade and liquidity flows, especially among the most vulnerable populations. Mobile money has proven to be a crucial lifeline for many businesses and individuals during the height of the pandemic. However, Kadzutu points out that while mobile money has seen significant growth in the region, there is still untapped potential for broader economic transformation. He notes that the majority of transactions currently conducted through mobile money platforms are person-to-person transfers, rather than business-to-business or person-to-business transactions. To unlock the full potential of mobile money, there is a need for greater integration with e-commerce platforms and other sectors such as insurance to drive more business and commercial transactions on these platforms. Kadzutu emphasizes the importance of interoperability between different mobile money services across East Africa to enhance the efficiency and usability of these platforms. He highlights the need for infrastructure improvements and policy interventions to facilitate seamless cross-border transactions and support the growth of mobile money services in the region. Kadzutu also underscores the role of regulation in ensuring a balance between the profitability of mobile money providers and the affordability and security of transactions for consumers. He emphasizes the need for regulators to provide a clear framework for consumer protection and redress mechanisms in case of disputes or issues with mobile money transactions. Looking ahead, Kadzutu predicts that the next phase of mobile money, Mobile Money 2.0, will usher in an exciting period of innovation and growth. As mobile money services continue to evolve and integrate with other sectors, we can expect to see a flourishing informal sector and greater financial resilience in East Africa. The future of mobile money in the region looks promising, provided that stakeholders continue to collaborate and innovate to maximize the potential of digital financial services for all segments of society.