13 May 2014

Shiny, digital, mobile money - Numeris-Media

Anne Agbakoba, Chief Research Officer
Numeris Media

May 2014 / Growing up, I often scratched my head over the concept of a money order: how did my father, who was away at Onitsha for a couple of days, manage to get money across to my mom in Lagos, which she would receive either at a post office or at a particular branch of Union Bank.

It was pure mystery. Mention this to today’s ‘natives’ (connected youth) – for whom money transfers involve a quick swipe of their smartphone – and they would laugh endlessly.

But, fast-forward to 2014, and with the growth of personal mobile phone ownership (table below), Africa has become the global leader in delivering financial services to the world's unbanked masses.

Across Africa, new ventures are using mobile money as a platform to facilitate other services like insurance, analytics, consumer credit, and eCommerce. The continent’s mobile network operators are boosting their bottom lines and raising standards of living by offering mobile wallets to the unbanked, making it possible to conduct a variety of transactions: from person-to-person money transfers to bill payments and point-of-sale purchases.


When in Nairobi (Kenya), I would get cash out of my Ecobank bank account, hand it over to an ‘M-Pesa’ mobile money agent, present an ID, type in a PIN, and the agent would credit my phone number with an equivalent amount of digital currency.

Similar to the ‘Paga’ mobile money service in Nigeria, I could store my mobile money and then, for a small fee, send it to any other phone number on my network – whether to a friend or a taxi, or to purchase airtime.

Disruptive idea: a bakery deploys mobile money?

However, despite the fact that mobile money seems all smooth, shiny and digital, the problem the global poor have had with traditional banks is their grossly inadequate bank branch network i.e a mobile money service can only thrive if there is a generous number of outlets where people can draw or deposit cash. A larger spread of locations results in the service being more accessible.

Now, here is how a BAKERY in Mexico took care of business.

Grupo Bimbo, one of the largest baking (yes, baking, not BANKING) companies in the world, got the bright idea that all the

700,000 family shops and small merchants that buy its baked goods might as well become retail locations for mobile money and payments services.

And so, using technology from Blue Label (a leading South African provider of prepaid airtime), Grupo Bimbo began installing mobile payment terminals in its merchants’ shops. The new machines enabled the small retailers offer mobile airtime top-up and bill payment services. And a partnership between Grupo Bimbo and Visa also allowed the retailers offer cashless debit and credit card transactions.

From September 2013, specially trained technicians could be seen across Mexico, literally arriving on bread trucks to set up machines and train shop owners.


It definitely looks like mobile money services are well on their way to replacing cash transactions and enabling the spread of micro transactions across Africa and other developing economies. Millions of people would be able to store, send and spend money at low transaction costs using their mobiles. And the need for financial inclusion, the slow growth of rural banking, and the increased use of remittances, will offer a big opportunity for mobile money growth.

Guest blog post by Anne Agbakoba, Chief Research Officer, NUMERIS-MEDIA anne@numeris-media.com