CIO EAST AFRICA.
As Africans increasingly gain access to mobile devices, aid and development organizations see them as a pathway to providing access to financial services to a large "unbanked" population, and a deal announced in Zambia this week aims to do just that.
The World Bank's International Finance Corporation (IFC) is pushing the drive for financial inclusion in the region by providing funding to mobile operators, and will provide US$1 million in funding to Airtel Zambia to to boost access to mobile financial services in the Zambian market.
The three-year project aims to help Airtel, Zambia's largest telecom operator, in building a sustainable mobile money operation.
The agreement is part of a $37 million funding initiative by IFC and the MasterCard Foundation to expand microfinance and advance mobile finance inclusion in Sub-Saharan Africa.
In addition to providing funding, IFC will also provide market research and advisory services on agent network management and business strategy development.
Most Africans do not have bank accounts and people have to travel long distances to access retail bank outlets. But increasingly, Africans are using mobile financial services to buy goods, pay utility bills, and send and receive money.
Kenya stands out as an example of how mobile services can increase access to finance, with its M-pesa service used by over 70 percent of Kenyans, according to IFC. Last month, the Central Bank of Kenya reported that Ksh 6.2 billion (US$71 million) is transacted everyday in Kenya via mobile money services. There are 25.1 million mobile financial service subscribers in the country, according to the Communications Authority of Kenya (CAK).
IFC also cited data for Tanzania showing that mobile money services have helped increase the rate of financial inclusion from 15.8 percent to 57.4 percent in four years.
Like many African countries, Zambia struggled to overcome the long-standing challenge of reaching out to the unbanked population. But statistics from the Bank of Zambia show that mobile money accounts, at 3.4 million, already outnumber the 2 million conventional bank accounts in the southern African country.
"Mobile money service has become the main tool to promote financial inclusion in Zambia," Bank of Zambia deputy governor in-charge of administration Dr. Tukiya Kankasa-Mabula said this week.
Financial services also offer a promising route to growth for mobile operators. Revenue from mobile voice services in most African countries including Kenya, Zambia, Zimbabwe and Uganda is declining as a result of stiff competition. Mobile telecom operators are looking to other service offerings to cushion the impact of falling voice revenue.