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Sub-Saharan Africa's mobile-money market could grow to $1.5 billion

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Staff writer ▼ | February 13, 2015
The use of mobile financial services in sub-Saharan Africa could produce an estimated $1.5 billion in fees for mobile-money providers by 2019, according to research being published today by The Boston Consulting Group (BCG).
Sub-Saharan mobile
By 2019   The Boston Consulting Group
The report, Africa Blazes a Trail in Mobile Money: Time for Banks and Mobile Operators to Devise Strategies, says that sub-Saharan Africans are looking for more-secure ways to borrow and save money and are open to other financial products delivered using mobile phones, including loans and insurance.

Although mobile financial services are emerging all over the world, sub-Saharan Africa's unique circumstances, a combination of a mostly "unbanked" population and heavy mobile-phone penetration, have turned the region into an early adopter of mobile banking and a test bed for the technology's potential.

Eight of the ten countries that make the most use of mobile financial services are in Africa, and sub-Saharan Africa has the highest proportion of active accounts (43 percent).

With the population in sub-Saharan Africa growing and becoming wealthier, the number of people aged 15 or older with an individual annual income $500 or more will rise to more than 460 million by 2019. This trend is likely to strengthen as governments in sub-Saharan Africa increasingly focus on their education, health, and security systems, enhancing the potential for long-term economic growth in their countries.

According to BCG, by 2019 there will also be some 400 million unique mobile-phone subscribers and almost 150 million traditionally banked sub-Saharan Africans. That will leave some 250 million sub-Saharan Africans aged 15 or older who have incomes of $500 or more and mobile phones but no traditional bank account. This gives a sense of the potential market for mobile financial services.

For banks and MNOs, a welcome dynamic of the market is its nascent state and the immature vendor landscape. With the exception of m-pesa -- a service whose breakaway success in Kenya, the report notes, stems largely from favorable regulatory circumstances, no mobile financial service in sub-Saharan Africa has established an impregnable position yet.

To succeed, banks and MNOs will need to invest in infrastructure, business capabilities, and governance.

A critical piece of infrastructure is a network of agents. These are the physical places where sub-Saharan African consumers can sign up for a mobile financial service and make deposits and withdrawals -- the equivalent of the terrestrial world's bank branches.