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Mobile banking as a financial inclusion tool

In recent years, mobile banking has grown considerably in Africa. The distribution of affordable equipment makes possible an offer of payment and a range of financial services without a bank account as the mobile phone can serve as a virtual bank card and store information related to customers and financial institutions. In 2011, in Kenya, where one-fifth of the population owns a mobile phone, 68% of adults use this tool to pay their bills or send or receive money.

Over the past decade, mobile telephony has grown exponentially in Africa, while the rate of access to banking services remains low. Mobile telephony reduces geographic constraints and transaction costs, thus increasing the diffusion of a remote banking model without incurring prohibitive distribution costs for massive distribution.

This exponential growth creates a unique opportunity to develop banking services. The majority of the African population does not have access to formal banking services. Sub-Saharan Africa has the lowest penetration rate of deposit taking financial institutions in the world, with an average of 16.6%. In rural areas, which represent 60% of the total African population, the network of commercial banks is practically non-existent.

Rapid implementation of mobile banking on the African continent

"Mobile banking" was probably invented in Kenya in 2007. Today, sub-Saharan Africa ranks first in the world in terms of money transfers by telephone in a continent where 80% of adults remain excluded from the banking system. In Kenya, 80% of adults have a telephone subscription and only 19% of them have a bank account. International remittances are made from telephone to telephone, in real time. The country has over 24,000 M-Pesa (national money transfer operator) outlets, more than five times the total number of post offices, postal banks, bank branches and ATMs in the country.

In 2009, M-Pesa had 10 million users. This number increased to 17 million at the end of 2011, of which one third were unbanked. M-Pesa's financial services, which have today expanded to a dozen emerging countries, have low value but volumes are significant and they generate significant gains. In November 2014, in the first eleven months of the year, M-Pesa's transactions were estimated at more than KES 2 100 billion (about 19 billion Euros), just for Kenya, representing a 28% growth from 2013, which represents almost half the GDP of the country.

In the field of mobile banking, Africa is a pioneer and a global laboratory: this continent alone has 15 of the 20 largest countries in the world in terms of use of mobile money. The mobile banking market, estimated at $ 200 billion in 2015, is therefore a tremendous vehicle for economic inclusion, since it enables the poorest, but not only, to access banking services.

Promoting people's access to mobile telephony represents today a tremendous means of accessing financial services and, by the same occasion, of financial inclusion of a large section of the African population still excluded from traditional mechanisms for the financing of the economy. But it is also a wonderful laboratory for observation, experimentation and inspiration for northern countries in which the growing effects of impoverishment and exclusion are strongly felt.

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Source : Jeune Afrique ; Initiative for Africa ; Tendances Eco ; CGAP