The mobile phone revolution
has changed the lives of many Africans, providing not just communications but
also basic financial access in the forms of phone-based money transfer and
storage. In essence, the substantial penetration rates of mobile
telephony that are transforming cell phones into pocket-banks in Africa is
providing opportunities for countries on the continent to increase affordable
and cost-effective means of bringing on board a large chunk of the population
that hitherto has been excluded from formal financial services for decades. This transformation
has been appealing not only for banks and Micro Financial Institutions (MFIs)
but also to financial regulators and governments, as well as development partners
who are providing support to ameliorate the lives of Africans via sustained
growth and poverty reduction policies. The Economist (2008) described the
phenomenon with the following sentence: “a
device that was a yuppie toy not so long ago has now become a potent for
economic development in the world’s poorest countries”. Consistent with
Aker & Mbiti (2010, 2008), at the Connect Africa summit in 2007, Paul Kagame
president of Rwanda asserted: “in ten
short years, what was once an object of luxury and privilege, the mobile phone
has become a basic necessity in Africa”. These perceptions have been
investigated and we have found
mobile phone penetration to mitigate African inequality, due to its positive
correlation with informal financial sector development.
Against
this background, while mobile banking has grown at a breathtaking pace in certain
countries (e.g Kenya), most African nations still need to take full advantage
of the many benefits procured by these mobile banking services. Hence, a
current policy challenge is to know why some African countries are more
advanced in mobile phone penetration and mobile banking than others. I am currently working on this issue and I will share with you the results as usual.
[1]
“Relative to the spread of some other
technologies that have been introduced in sub-Saharan Africa-improved seeds,
solar cook stoves and agricultural technology-mobile phones adoption has
occurred at a staggering rate on the continent. Yet few empirical economic
studies have examined mobile phone adoption. This could be due to a variety of
factors, including unreliable or nonexistent data on individual level adoption
(leading to measurement error)…” Aker & Mbiti (2010, 225).
[2]
As far as we have reviewed, one of the most exhaustive accounts of the ‘mobile
phone’ development literature concludes: “Existing
empirical evidence on the effect of mobile phone coverage and services suggest
that the mobile phone can potentially serve as a tool for economic development
in Africa. But this evidence while certainly encouraging remains limited”
(Aker & Mbiti, 2010, 224).
