Crypto and Mobile Payments Enhance Financial Inclusion in Africa

Africa’s
Shift
towards
Digital
Financial
Platforms

As
Africa
moves
towards
a
digital
economy,
cryptocurrencies
and
mobile
payments
are
playing
a
critical
role
in
promoting
financial
inclusion.
Despite
various
challenges
such
as
cost
barriers
to
opening
an
account,
high
remittance
fees,
a
lack
of
identifying
documentation,
limited
access
to
physical
bank
branches,
and
an
economy
that
still
largely
operates
on
cash,
the
continent
is
emerging
as
a
global
leader
in
mobile
money
transactions.

Today,
Africa
accounts
for
70%
of
the
world’s
$1
trillion
mobile
money
value
and
nearly
half
of
registered
mobile
money
accounts.
The
value
of
Africa’s
mobile
money
transactions
significantly
increased
to
$701.4
billion
in
2021
from
$495
billion
in
2020.
This
trend
suggests
that
the
future
of
African
financial
services
is
both
digital
and
mobile.

Mobile
Money
and
Crypto
Adoption

Mobile
money,
an
electronic
payment
technology
that
allows
money
transfers
between
mobile
devices
using
a
SIM
card,
has
been
pivotal
in
broadening
access
to
financial
services
in
areas
where
financial
infrastructure
is
lacking.
Moreover,
research
shows
that
by
2025,
at
least
70%
of
all
online
transactions
will
be
made
with
alternative
payment
methods
such
as
digital
wallets,
mobile
money,
and
instant
payments.

Despite
the
growing
adoption
of
mobile
money,
broader
financial
services
are
still
not
reaching
the
majority
of
African
citizens.
This
gap
has
led
to
a
surge
in
the
use
of
digital
financial
services,
particularly
crypto-enabled
payments.
Africa
is
one
of
the
fastest-growing
crypto
markets
in
the
world,
with
tech-savvy
consumers
across
Ghana,
Nigeria,
and
South
Africa
leading
the
way.
Last
year,
the
number
of
retail
transfers
of
$1,000
actually
increased
in
Sub-Saharan
Africa,
reflecting
a
growing
trend
of
using
digital
currencies
to
solve
issues
related
to
financial
inclusion
and
limited
access
to
the
banking
system.

Challenges
and
Opportunities

While
Africa
leads
the
world
in
the
number
of
mobile
money
accounts,
the
region
is
still
plagued
by
low
rates
of
interoperability.
Users
often
have
to
move
money
in
and
out
of
various
wallets
to
complete
transactions.
This
issue
hinders
the
growth
of
electronic
payments
and
limits
the
potential
benefits
of
financial
innovation
and
inclusion.

However,
there
is
a
significant
opportunity
for
Africa’s
fintechs
to
leverage
the
success
of
mobile
money
to
promote
the
adoption
of
crypto-enabled
tools.
These
tools
can
make
payments
even
more
accessible,
approachable,
and
affordable
for
everyday
users.
Building
safeguards
like
Know
Your
Customer
(KYC)
and
Anti-Money
Laundering
(AML)
into
mobile
money
transactions
that
utilize
blockchain
and
crypto
technology
can
grow
safe,
scalable
adoption
and
address
concerns
around
organized
crime.

As
the
world’s
workforce
continues
a
remote
or
hybrid-first
model,
this
opens
up
further
possibilities
for
Africa
to
stimulate
its
economy
with
crypto-enabled
payments.
The
African
workforce
now
has
the
opportunity
to
go
global,
uplifting
millions
from
poverty
and
enabling
remote
workers
to
be
efficiently
paid
with
crypto
via
digital
wallets
on
their
mobile
devices.

Image
source:
Shutterstock

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