Panel 26

Mobile Money and Digitization of Financial Transactions in sub-Saharan Africa (SSA): A Pathway out of Poverty through Financial Inclusion

Conference Sub-Theme: The changing flows of resources and capital

Panel organiser: Franklyn Lisk, Centre for the Study of Globalisation and Regionalisation, Politics and International Studies Department and Africa Lead - Global Research Priority on International Development, University of Warwick, UK.


There are good reasons to believe that Africa should take advantage of the digital revolution sweeping through the continent to promote financial inclusion as a pathway out of poverty for the estimated 330 million “unbanked” Africans – about 80 per cent of the region’s working-age population – who presently use no formal or informal financial services. The widespread and still increasing use of mobile phones in SSA has resulted in the rapid digitization of commercial and financial transactions across all countries in the region. This trend is now paving the way for ‘de-cashing’ of national economies,  in the sense of the gradual phasing out of the use of currency in circulation and its replacement by mobile money and various forms of digitized convertible bank transfers. Available evidence from the contemporary African scene indicates a variety of digital payment and money transfer systems like the M-Pesa which originated in Kenya a decade ago in 2007, EcoCash, and local versions of E-Wallet mobile money account.

The panel invites papers that will address various aspects of how the increasing use of mobile and digital money in financial and commercial transactions in Africa impacts on the reduction of poverty and inequality, through financial inclusion (i.e. bringing hundreds of millions of hitherto financially excluded Africans into profitable and active participation in different sectors and levels of national and regional economies). Additionally, the panel  seeks contributions on   how the drive towards a cashless or ‘cash-lite’ society, resulting from mobile money  and  digitization, can curb corruption through reducing the incidence of illicit financial flows and ‘black economy’ transactions (which tend to thrive on unrecorded cash transactions) and boosting state revenue collection.

Approved abstracts panel 26

1. Profiling Mobile Money Usage In The Business Enterprise Sector In West Africa: A Cross-Country Analysis

Author: Love Odion Idahosa, College of Business and Economics, University of Johannesburg, South Africa.

The Mobile money revolution on the African continent has generated a lot of discourse on its innovativeness as a market device for financial inclusion. The adoption of Mobile money has however extended beyond person-to-person transitions to adoption by private enterprises to facilitate money transferrers and payments. This trend promises to improve the ease of doing business, possibly lower the cost of financial transactions, and could pave the way for the ‘de-cashing’ of private sector transactions in these developing economies. The upscaling of mobile money adoption in the private sector also has the potential reducing the prevalence of illicit financial flows thereby stifling corruption associated with the cash transactions, especially in the ‘black economy’. This study critically evaluates the use of mobile money in the manufacturing and services sector in nine (9) West-African Countries (Guinea, Togo, Mali, Cote d’ Ivoire, Benin, Cameroon, Niger, and Sierra Leone) with a view to profiling mobile money usage and non-usage as the first step in understanding the requirements for widespread adoption. Making use of descriptive and inferential statistical analysis, this study analyses the World Bank Enterprise data for 2016 and 2017 to profile Mobile money usage amongst businesses in the nine countries. It focuses on ascertaining the nature and characteristics of mobile money users and non-users and understanding the motivations for and challenges involved in using mobile money. Based on this, the potential for using mobile money to ease financial transactions in the business sector is assessed with a view to making recommendations to improve mobile money usage by private enterprises. The findings will be relevant for state policy makers as well as commercial finance investors looking to leverage the unbanked population for inclusivity and/or profitability.

 Key words: Mobile Money, Business Enterprise Sector, West Africa

2. ‘Financial Inclusion via Social Cash Transfers: The Case of South Africa’

Author: Lena Sophia Gronbach, Human Economy Programme, University of Pretoria, South Africa.;

In recent years, two separate but potentially complementary trends have emerged in the global South: the emergence of digital payment technologies with their enormous potential to boost financial inclusion, and the extension of social cash transfer programmes as a means to address poverty and inequality. Increasingly, these two developments are being translated into a single headline objective: to replace cash-based payments with digital transfers into ‘financially inclusive’ accounts, thus promoting financial inclusion among the recipients of social cash transfers. According to the proponents of this strategy, this will create a ‘triple-win scenario’, benefitting the state, private financial companies, and the poor alike.

South Africa, which boasts the largest social cash transfer system on the continent, has assumed a pioneering role in implementing this ‘G2P approach’. In light of the growing interest among African policymakers in implementing similar programmes, the South African case thus holds valuable lessons for other developing countries. Yet, the case has not been without controversy and has revealed a number of important issues with regard to the use of digital G2P payments as a means to promote financial inclusion. Moreover, the South African government has failed to reap the potentially large benefits of ‘mobile money’ technologies, relying instead on the traditional banking infrastructure.

This paper outlines how South Africa used its rapidly expanding social grant system to ‘bank the unbanked’ and discusses the main issues that emerged in this process. These include the protection of beneficiary data, the harshly-criticized practice of cross-selling financial services to grant recipients, debit deductions from beneficiaries’ bank accounts, the relationship between the state and its financial contractor, and the considerable cost of the current system. The paper argues that, despite its potential to act as a catalyst for financial inclusion, the ‘G2P approach’ in its current form requires considerable fine-tuning in order to work for instead of against the poor.

3. Gizmos of connection or disconnection? Mobile phones and young urban entrepreneurs in Harare, Zimbabwe

Authors: Stanley Tsarwe, Department of English and Media Studies, University of Zimbabwe, Harare, Zimbabwe & Admire Mare, Department of Communication, Namibia University of Science and Technology, Namibia.

This paper examines the everyday uses of mobile phones in urban spaces by Zimbabwean youths engaged in different forms of informal trading on the streets of Harare. It focuses on new frontiers of economic activity associated with informal businesses in emerging African markets, and the role played by mobile phones in facilitating socio-economic exchanges as well as urban mobilities in specific contexts. Through informal field observations and in-depth interviews with young street vendors in Central Harare, our study demonstrates the localized appropriation of mobile phones in a context where both “quiet” and “direct” encroachment have become normalized. Viewing the market as socio-cultural and technological spaces which are constituted in both virtual and non-virtual worlds, we provide new evidence of thriving mobile payments, marketing, surveillance and distribution networks in Harare. We argue that mobile phones are not just enablers of digital market placers but they are market makers. They are instrumental for social and market-place interactions, and interestingly, the socio-technical interactions reflect high technological ingenuity. We argue that mobile phones have spawned new forms of social interaction and mobility which are reconfiguring the vending, marketing, payment and banking practices of young entrepreneurs.

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