The Mobile Money Economy and Social Change in Sub-Saharan Africa

The Mobile Money Economy and Social Change in Sub-Saharan Africa

The GSMA has released a report detailing the greatest barriers to mobile money enabling social change and innovation in Sub-Saharan Africa. Despite some obstacles, digital commerce is advancing, with venture capital and expanding mobile network capabilities on the rise.

“Mobile commerce will be central to the evolution of the digital commerce market in Sub-Saharan Africa, as the majority of internet users in the region will access the Web through mobile devices.”

Yet with the region trailing behind other developing countries in terms of access to mobile internet services, the report asks what are the main factors causing this? And what can MNOs do to ensure future progress?

The network coverage gap is one such issue still to be tackled, as the cost of implementing and maintaining infrastructure in sparsely populated, poorer areas has dissuaded much needed investment. The GSMA suggest that network sharing, sufficient support from the government, and using alternative technologies may provide some solutions.

“Mobile operators are employing a range of solutions to tackle the challenge of off-grid connectivity, including the increasing use of green options such as solar power, wind, water, biomass and fuel cells.”

If enforced however, these  strategies mustn’t compromise the affordability of mobile ownership. Taxes levied specifically on this sector already increase individual user costs, and have been noted to impose an artificially reduced rate of mobile consumption.

“Mobile-specific taxes place a disproportionate burden on poorer Africans, including women who tend to earn less than men, excluding them from the benefits of digital and financial inclusion.”

Another recent study by the GSMA investigated the tax system in Ghana, where the cost of mobile ownership is significantly higher than the regional average. As a region-specific solution, it was suggested that taxes could be rebalanced towards goods and services that fail to contribute positively to the wider society, as this would give more power to improving the state of the economy without sacrificing revenue potential.

The third hurdle mentioned in the GSMA report focused on the need to promote digital literacy and produce local content to engage a wider social margin. With 40% of the population digitally illiterate, this remains an integral factor to the adoption of mobile services.

A successful example of a programme already in place to address this concern comes from Airtel in Nigeria. The operator offers first-hand experience with internet services to underserved and rural consumers, whilst running demonstrations on smartphones and tablets on the ‘Airtel ICT Train’, which travels across the country.

Whilst mobile financial services remain a key counterpart to traditional banking methods in a region where only a third of adults have formal bank accounts, how will mobile technology address the challenges it faces?

To view the full report, please click on the following link.

The view the full report on tax reform in Ghana, please click on the following link.

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