The Rise of Mobile Banking in Africa: Revolutionizing Financial Inclusion and Economic Growth

In the bustling continent of modern Africa, a revolution is underway— one that will permanently reshape the continent’s financial ecosystem. In recent years, Africa has radically transformed its mobile banking or financial technology (Fintech) landscape. Fintech companies are upgrading standard finance by providing innovative solutions and improving financial services. 

For unbanked Africans, mobile banking allows financial inclusion. It’s a way to join the economy without a traditional bank account. As a result, Africa’s mobile banking market grew exponentially, with digital transactions reaching a stunning $701.4 billion in 2021.

Understanding the explosive rise of mobile banking in Africa is crucial to unlocking opportunities in the continent, especially for businesses planning to enter the fintech industry. Here’s an in-depth discussion of how mobile banking started and continues thriving on the continent. 

🔑 Key Takeaways

• Africa’s mobile banking market has experienced exponential growth, with digital transactions reaching $701.4 billion in 2021.
• The growth of mobile banking in Africa is driven by the presence of traditional banks and the increasing smartphone penetration.
• The biggest African fintech services are M-Pesa, Orange Money, Tigo-Cash, EcoCash, MoMo or MTN Money, and Airtel Money.
• Egypt, South Africa, Nigeria, Morocco, Ghana, and Kenya are leading the way in mobile banking adoption, with each country experiencing unique developments in its fintech landscape.
• Despite the growth, mobile banking in Africa faces challenges such as the lack of continental unity, multiple currencies, ongoing conflicts, digital illiteracy, and inadequate technological infrastructure.
• The future of mobile banking in Africa includes a focus on financial inclusion, open banking initiatives, blockchain-based fintech solutions, and the rise of neobanks to provide cost-effective digital banking services.

The Timeline of African Mobile Banking

Mobile telecommunications and fintech services have come a long way in Africa since 2000. Telephone providers played a considerable role in distributing mobile networks and services, leading to the widespread usage of smartphones and, subsequently, mobile banking.

This timeline highlights the key milestones in Africa’s mobile banking history.

2000	Mobile phone service providers implemented aggressive diffusion strategies for mobile networks.
2007	The Kenya-based company, M-Pesa, launched the first virtual banking system and microfinancing service on the continent, creating the first payment system for mobile phones via SIM cards.
2008	Orange SA introduced Orange Money in the Ivory Coast, which provided cash-in and cash-out services, airtime top-ups, and bill payments.
2009	Post-paid and prepaid mobile cellular telephone subscriptions in the continent increased to 441,897.
	The Zain Group introduced a mobile money transfer business called ZAP in Kenya and other African regions.
2010	Bharti Airtel, an Indian multinational company, entered Africa and acquired mobile operations in 15 African nations from the Zain Group. Eventually, the company introduced Airtel Money to compete with M-Pesa.
2011	Zimbabwe’s Econet Wireless rolled out a phone-based money transfer, financing, and microfinancing service called EcoCash.
2012	The Central Bank of Nigeria established the 2012 Cashless Nigeria policy to reduce physical cash circulation and encourage more electronic payments.
	Barclays offered Hello Money services in Africa, allowing mobile phones to transfer money from the United Kingdom.
2016	Morocco’s BMCE Bank launched the first online banking site, BMCE Direct, which set the stage for its mobile payment solution, DabaPay.
2018	The Algerian government created Edahabia, a national mobile payment system, to reduce cash usage and advance financial inclusion.
2019	The Moroccan government introduced its national mobile payment system, M-Wallet.
	45% of Sub-Saharan Africa’s (SSA) population had mobile subscriptions, totaling 477 million.
2020	MTN and Vodacom released Sub-Saharan Africa’s first 5G networks, providing 5G mobile and Fixed Wireless Access (FWA) services in South Africa.
	The COVID-19 pandemic accelerated digital payment adoption across the continent.
	Western Union and Bharti Airtel joined forces to create a platform for real-time cross-border money transfers in India and Africa.
2021	Africa’s mobile money transactions climbed by 39% to $701.4 billion.

Understanding the history of African mobile banking sheds light on its inner workings. The timeline above shows the interplay of economic and social factors that led to the current state of the mobile money market in Africa, which will be discussed in detail below.

Africa’s Mobile Money Market

Digital money transactions and all its kinds are rapidly growing in Africa. The continent’s mobile money transactions, including payments and transfers, rose by 39% in 2021. The total value reached $701.4 billion, up from $495 billion in 2020. With these figures, Africa became a global leader, occupying 70% of the world’s $1 trillion mobile money value. 

Moreover, if examined exclusively through the number of transactions processed from 2022 to 2023, Africa still leads, owning a 67.1% share.

Source: Mckinsey.com

To further illustrate the sheer scale of Africa’s mobile money market, a survey from the World Bank revealed that Sub-Saharan Africa (SSA), one of the continent’s largest regions, has over 400 million registered users on mobile money platforms. That’s more than half of the world’s total accounts.

As for future predictions regarding the market, the mobile money market is expected to grow at a Compound Annual Growth Rate (CAGR) of approximately 22.7% from 2023 to 2030. By 2025, revenue from African mobile payments is projected to rise between $14 billion and $20 billion, soaring from 2023’s $3.5 billion.

Traditional banks and smartphones are the driving forces behind mobile banking’s impressive growth rate. Smartphone prevalence has revolutionized how people manage their finances, while the involvement and investment of traditional banks remain significant. As a result, mobile phones have provided users with a better avenue to handle their day-to-day financial tasks. To gain a thorough understanding of the critical factors that affect the mobile banking market, delve into the sections below:

Bank Presence in Africa

Traditional banking is an essential factor in mobile Internet finance. They’re crucial market drivers for each other, like two sides of the same coin–– not exclusive of the other.

Interestingly, mobile money can amplify the impact of traditional finance. When services like bank capital and accounts are combined with mobile money, it can improve financial productivity, even in countries where mobile money adoption is slow.

As a result, the rise of mobile banking in Africa boosted the growth of traditional banking. Although formal banking costs remain high, these financial institutions increased in 2021, especially in leading countries: 

• South Africa
• Nigeria
• Egypt
• Morocco
• Ghana
• Kenya

Source: US International Trade Administration and Statista

Kenya led Africa, with 88% of its population engaging with banking products. South Africa was a close second with 82%. This was followed by: 

• Ghana (67%)
• Nigeria (51%)
• Morocco (42%)
• Egypt (38%)

A year later, in 2022, those figures rose further. 763 commercial banks were established across all 54 African states, and the continent witnessed a 48% overall penetration rate as more people learned banking.

Source: Statista

Furthermore, 2022 was a year that favored South Africa. Even though Kenya had more banked people in the year prior, South Africa regained its footing in the industry with an aggregated capital of $42.2 billion from its central bank. The South African Standard Bank Group, now the continent’s leading bank, had a capital worth $11.7 billion.

Africa’s Mobile Phone Penetration

The adoption of mobile banking in Africa is highly dependent on the penetration rate of phones since this service fundamentally requires a mobile device.

Mobile phone usage in Africa has increased, parallel to global trends. In 2021, the continent was home to a significant portion of the 3.8 billion smartphone users worldwide. According to Afrobarometer’s survey of five leading African countries, mobile phone ownership was over 94% that year, meaning nearly all residents had at least one device. 

The same survey was conducted in 34 African states, revealing that 24 had over 75% phone ownership. Gabon led the results, with 96% of its population owning a mobile phone. 

Source ITC & TELECOM

Another way to demonstrate the increasing number of mobile phone users in Africa is by looking at SSA, which includes the continent’s Central, East, Southern, and Western nations. SSA alone had over 477 million unique mobile subscribers in 2018, according to The GSM Association (GSMA). 

The organization estimates that the region will add 167 million new unique mobile phone subscribers by the end of 2025, potentially giving them a 623 million user base. For comparison, that’s about half of Africa’s entire population.

The influx of mobile phone users in Africa shows that more people now have access to the devices required to use fintech services. Moreover, around 34% of South Africans and 27% of Nigerians who belong to SSA have confirmed that their devices are smartphones. These phones can run the latest versions of the major fintech apps used on the continent.

The Key Players in African Mobile Banking

Due to the rapid increase in mobile phone usage, Africa has attracted more companies to meet the rising demand for digital financial services. Many of these key players don’t just provide mobile payment services. They also offer insurance, loans, and other conveniences that attract millions of users yearly.

While Apple Pay is the most widespread mobile payment service in the US, the story differs in Africa. There are around 140 active mobile banking or fintech companies operating in the continent, and the most prominent are: 

• M-Pesa
• Orange Money
• Tigo-Cash
• EcoCash
• MoMo or MTN Money
• Airtel Money

These services have been a game-changer for Africa, where traditional banking is often inaccessible to more than half of the population. Millions use them on a day-to-day basis.

M-Pesa has had a steady increase in its user base since 2017. It seems to be the popular choice for African mobile financial transactions, with 56+ million customers. However, MoMo has overthrown the service with a lead of 5+ million users. 

Consequently, the company’s revenue escalated by 32.2% to an estimated $3.9 billion in 2022. That’s leagues away from M-Pesa’s $885 million.

Another large mobile money brand is Orange Money, with 50+ million subscribers; 

• Tigo-Cash – $2.7 million
• EcoCash – $10 million
• Airtel Money – $19 million

These mobile banking companies significantly improve Africans’ financial situation, especially if they’re from leading nations.

Mobile Banking Adoption in Leading African Nations

Fintech has taken Africa by storm, driven by widespread mobile phone usage, a soaring bank penetration rate, and government initiatives. No country demonstrates this better than Egypt, South Africa, Nigeria, Morocco, Ghana, and Kenya. 

These top nations have contributed to the rise of mobile banking in Africa for decades. Moreover, their mobile banking landscapes are still evolving, reshaping how people manage their finances.

South Africa 🇿🇦

As the continent’s digital powerhouse, South Africa has a vast mobile banking market. The country’s national digital payment system is the Instant Payment System (IPS). However, many fintech companies have popped up over the years, gaining popularity and eventually overtaking IPS. FNB Pay, Garmin Pay, and OZOW’s instant Electronic Funds Transfer lead the South African market, and traditional banks have also developed their mobile banking services. 

Despite these improvements, many South Africans still don’t utilize banking services, and the country also has a high cash dependency.

Nigeria 🇳🇬

Since the introduction of Nigeria’s Cashless Policy in 2012, there has been a significant increase in the adoption of mobile banking in the country. Despite low internet availability in many regions, more than half of the Nigerian population manages regular mobile payments. Their usual mobile payment services are MoMo, Opay, Palm Pay, and other brands only popular in Nigeria.

Egpyt 🇪🇬

Egypt has contributed heavily to the rise of mobile banking in Africa because of its government’s efforts. In line with the state’s Sustainable Development Strategy and Vision for 2030, mobile wallet penetration is estimated to climb to 50% in 2025 and reach more than $30 billion in transaction worth. 

The Egyptians are experiencing a mobile banking renaissance, especially after the COVID-19 pandemic. Many people have chosen contactless transactions to avoid infection.

Morocco 🇲🇦

After an unsuccessful start in 2010, Mobile banking eventually escalated in Morocco. Like its neighboring countries, the high mobile phone penetration helped Morocco adopt mobile money systems.

The Moroccan government collaborates with different telcos and US digital banking expert Kony to implement a long-term digital transformation strategy to modernize the Moroccan banking sector.

Ghana 🇬🇭

In the past decade, Ghanaian mobile money has evolved beyond simple transfers to microcredit, loans, and seamless integration of bank accounts. 

What started with MTN Mobile Money (MoMo) grew into a robust mobile banking ecosystem with multiple participating companies and millions of subscribers. More than half of Ghana’s population aged 15 and above had mobile money accounts in 2023. Mobile money transactions amounted to $87 billion in value. 

However, the popularity of mobile money services led to issues with small digital loans and financial stress. Additionally, 50% of registered mobile money accounts remain inactive, causing providers several tax and loan recovery issues.

Kenya 🇰🇪

Kenya is Africa’s mobile banking pioneer. It has been leading the way in mobile banking adoption since it introduced the M-Pesa platform in 2007, which now has 56 million users. The country is also home to multiple fintech solutions, including mVisa, a service created by the multinational corporation Visa.

Equity Bank, one of Kenya’s largest traditional banks, also embraced the digital shift. It now has 16.9 million clients, servicing them through their mobile phones. By 2023, Kenya’s financial inclusion rate was largely driven by both M-Pesa and Equity Bank. These two and Kenya’s other fintech companies will continue to grow and gain more users.

Fintech in Africa has grown significantly due to high mobile phone usage, bank presence, government support, and convenience. This is clearly seen in Egypt, South Africa, Nigeria, Morocco, Ghana, and Kenya.

However, despite these countries’ considerable progress, their fintech ecosystems and infrastructure still need major improvements. This is especially true since Africa, as a whole, presents many challenges to the growth and development of mobile banking.

The Challenges African Mobile Banking is Facing 

Large barriers stand in the quest to revolutionize mobile banking across Africa. Firstly, there’s a lack of unity. The African Union (AU) struggles to unite its diverse member states under a single banner. Other key challenges that hinder the fintech industry’s growth include: 

• The presence of multiple currencies
• A tumultuous history of conflicts
• Digital illiteracy
• An inadequate digital infrastructure

Addressing these issues is crucial for unlocking the full potential of mobile banking and for promoting financial inclusion on the continent.

The Lack of Continental Unity

The first hurdle to expanding mobile banking is the continent’s problem with unity. Experts agree that for financial technology to prosper, there should be true solidarity among African states.

In 1963, independent African States created the African Union (AU) to unify the continent. By 2023, the body had 55 member states. However, unlike the European Union (EU), the AU lacks many essential factors to tie Africa together.

Africa’s Multi-Currency Nature

The African continent has about 41 currencies. Because of these factors, Fintech transactions in each country remain mostly internal. Unlike the EU’s Euro (€), the AU doesn’t have a single currency that can unify all of Africa. Countries like Zimbabwe even have multiple-currency systems that further complicate this problem.

Specific problems arise from a continent that deals with several competing currencies. Firstly, they have unpredictable exchange rates. Additionally, the AU’s African Digital Transformation Strategy (2020-2030) has identified a lack of harmony between regulations established by the different countries regarding mobile banking services. Worse, some countries don’t even have regulations to deal with fintech. It’s difficult for users to transact across borders.

Civil Wars and Other Armed Conflicts

The second factor involves stability and peace within the continent. Despite its imperfections, the EU has helped maintain some form of peace in many parts of Europe. On the other hand, the AU has had to deal with a continually armed Africa where state and non-state actors have waged an estimated 630 armed conflicts from 1990-2015 and more than 35 in 2023.

The continent’s many civil wars, mostly caused by the rich ethnic diversity of its nations, have made it tough for mobile banking and other financial initiatives to flourish.

The Lack of Knowledge and Awareness Regarding Fintech Services

According to a study on mobile banking adoption in organizations, many Africans find it challenging to use Fintech simply because they lack the necessary knowledge and awareness. Furthermore, this inadequacy leads to a lack of confidence, another weighty barrier to adopting mobile banking.

This problem can only be solved if tackled at the most basic level–– improving digital literacy. In many parts of Africa, especially in rural areas, high levels of digital illiteracy make it difficult for people to incorporate pieces of technology into their daily lives.

In 2019, only 10% of people in Mozambique and 23% in Côte d’Ivoire had adopted digital skills, indicating that most people couldn’t use digital devices and applications or even access the internet. Moreover, many businesses and local governments lack confidence in adopting mobile banking services due to insufficient knowledge about the interface and content of mobile applications. This can lead to non-usage or rejection of mobile money services.

Inadequate Technological Infrastructure in Many African Nations

While Egypt, South Africa, and other leading nations are growing technologically, Africa is still home to many developing countries. The AU’s 2020-2023 Digital Transformation Strategy for Africa sites weak coordination among continental institutions in pursuing digitalization and building more technological infrastructure.

One major example is Africa’s poor network infrastructure. It’s a particularly huge issue, especially since you can’t use mobile banking apps or SIM cards without towers to connect them. 

The World Bank’s survey on African Digital Development revealed that access to broadband connectivity in Africa is limited, with less than 1/3 of the population accessing it. Approximately 300 million Africans also live 50+ kilometers away from broadband connections. 

As a result, Africa has a low internet penetration rate of 36%, with 21 out of the 25 countries with the lowest connectivity rates belonging to Africa. With these problems, many businesses across nations have not even bothered to explore fintech initiatives, looping back to the lack of knowledge and awareness.

The lack of unity across the continent, limited digital literacy, and inadequate technological infrastructure have collectively impaired the growth of fintech services. However, it’s important to note that these obstacles are solvable and provide a roadmap for African mobile banking.

The Future of Mobile Banking in Africa

89% of the global population used mobile banking in 2023. The massive rise of mobile money worldwide came with trends that eventually found their way to Africa. While facing numerous challenges, Africa is embracing innovative fintech solutions. 

The following mobile money trends in Africa could transform the continent and promote financial inclusion. 

Financial Inclusion

Financial Inclusion, or the opportunity for equal and accessible financial services, has always been Africa’s top priority. In their 2022 report on the African fintech industry, the McKinsey consulting firm stated that, in Kenya alone, financial inclusion climbed from 25% in 2006 to 85% in 2021. That’s nearly four times from where it sat initially.

Mobile banking platforms are innovative solutions that help bridge financial inclusion gaps in developing African countries. By 2023, many formerly unbanked Africans could conveniently and securely access these platforms. Their services include opening accounts, making payments, transferring funds, and accessing credit facilities.

Open Banking

Open Banking is a system that gives you third-party access to your financial data via Application Programming Interfaces (APIs). This trend is gaining popularity in Africa. 

Open banking empowers traditional financial institutions to compete with fintech companies. By granting third-party developers access to their APIs, banks can work with the same fintech companies to create better products and services that meet unique African needs.

Nigeria is the first African country to have an Open Banking framework. In early 2023, the Central Bank of Nigeria approved the guidelines and launched open banking within the state. Mono, OnePipe, Stitch, Okra, and Truid are other popular open banking platforms. 

Blockchain-Based Fintech

Blockchain utilizes person-to-person transactions and decentralized protocols, eliminating the need for third parties during banking transactions. This process speeds up process times and can even lower transaction costs for users and the fintech companies.

The world’s blockchain technology market is projected to reach a $20 billion revenue in 2024. For Africa, this technology is not new. African blockchain companies raised $91 million in the first quarter of 2022. However, only a handful of fintech services have successfully adopted this innovation. 

Among the most notable names that utilize blockchain are BitPesa, a remittance platform based in Kenya, and Wala, a lending service in South Africa. These mobile banking services enable secure and transparent financial transactions across the continent.

Neobanks

Neobanks are new-age banks that don’t have any physical location. They’re a cost-effective alternative to traditional banking. Since they’re purely digital, they don’t spend on bank branches, driving their transaction costs down.

The most used African Neobanks are TymeBank in South Africa and ALAT by Wema Bank in Nigeria. These services use advanced technology to offer seamless digital banking experiences.

The average transaction value per user in the Neobanking market amounted to $5.43 thousand in 2023. Additionally, experts project Neobank transaction value to have an annual growth rate (CAGR 2023-2027) of 22.62%. This could lead to a total amount of $30.97 billion by 2027.

The Bottom Line

Mobile banking in Africa has witnessed remarkable growth and transformation in recent years. The continent has emerged as a global leader in mobile money. Sub-Saharan Africa alone registered over 400 million users on mobile money platforms accounting for more than half of the world’s total accounts. 

However, digital illiteracy, inadequate infrastructure, and continental unity remain tough problems to solve. Nevertheless, the future of mobile banking in Africa looks promising as emerging trends aim to enhance inclusion and accessibility across all African nations.

FAQs on the Rise of Mobile Banking in Africa

Which country has the best banking system in Africa?

Morocco’s Bank of Africa (BOA) has been acclaimed as the continent’s best bank in 2023. However, you can find many of the continents’ top 100 banks in South Africa and Egypt. In fact, Egypt has 21 of the top 100.

When was mobile banking introduced in Zimbabwe?

Mobile banking started in Zimbabwe in September 2011. This was when leading mobile operator Econet Wireless, launched its mobile phone banking service.

When was mobile banking introduced in Tanzania?

In early 2008, E-Fulusi introduced MobiPawa, the first mobile wallet in Tanzania. After that, Vodacom released M-Pesa in April of the same year. Over the years, Tanzania has seen multiple mobile banking services, including Z-Pesa, Airtel Money, and Tigo Pesa.

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By Aditya Rayaprolu

Aditya is an Azure DevOps and Infrastructure Virtualization Architect with experience in automation, infrastructure management, and designing and implementing virtualization solutions. His expertise encompasses both on-premise and cloud-based systems. Aditya's articles on TechJury serve as a reliable resource for individuals and organizations looking to harness the power of cloud computing, embrace automation, and leverage infrastructure-as-code practices.