How Mobile money is used as the most innovative financial inclusion tool in East Africa:

Why is it not effective in Nigeria?

How Mobile money is used as the most innovative financial inclusion tool in East Africa:
How Mobile money is used as the most innovative financial inclusion tool in East Africa:

Mobile money has been the most innovative financial Inclusion tool in East Africa (Kenya and Uganda especially). It is widely used by more than 70% of the populace. During my trip to western Uganda, there was a time when I was almost out of cash, I was looking for an ATM, then my colleague asked me; don’t you have a mobile money account? With my “Nigerian mind”, I answered; does that really work? That is when he lectured me about mobile money, how it is more accessible than the conventional ATM. He went on and made a withdrawal from a recharge card vendor. I was surprised, I felt like I am from the Stone Age.


Mobile money has significantly increased financial Inclusion in East Africa. Even within the major cities, there are thousands of people, who do not have a bank account. Most of these people are discouraged by the stress of documentation and bank’s long due process. They would rather do all their transactions in cash. But with mobile money, both on boarding and transaction processes have been made easily accessible and seamless. And more people are now doing cashless transactions. And this includes people in highly remote areas. I was surprised when I saw a Safaricom promotion truck deep inside a forest in Northern Kenya, this area is not only remote, it is literally a community inside a forest.

Mobile money has seen a remarkable success in East Africa. Mpesa, for example, has spread quickly, and by 2010 had become the most successful mobile-phone-based financial service in the developing world. By 2012, a stock of about 17 million M-Pesa accounts had been registered in Kenya. By June 2016, a total of 7 million M-Pesa accounts have been opened in Tanzania by Vodacom. The service has been lauded for giving millions of people access to the formal financial system and for reducing crime in otherwise largely cash-based societies. It has since expanded to Afghanistan, South Africa, India and in 2014 to Romania and in 2015 to Albania. In a 2015 published article, Anja Bengelstorff cites the central bank of Kenya when she states that 1 billion CHF is moved in the fiscal year 2014, with a profit of 268 million CHF, that is close to 27% of the moved money. [20]In 2016 M-Pesa moved 15bn KES per day equivalent to 52 billion CHF in Kenya, with a revenue of 41bn KES. In 2017 6869bn KES were moved according to a figure in Safaricoms own annual report, with a revenue of 55bn. This would put Safaricom’s profit ratio at around <1% of total money transferred – nothing like 27% but still a high figure (Source; Wikipedia).

How is this achieved? It is made simple, easily accessible, affordable and secured.

Simplicity: On boarding users on Mobile in East Africa is very easy. Once you have a registered mobile number, you can easily register for mobile money on any phone with a short code. Initiating various types of transactions is also made seamless.

Easy Accessibility: Mobile money is branch-less. In Uganda for example, deposit and withdrawals can be made anywhere. You can initiate transactions like withdrawal and deposit with any recharge card vendors close to you. That is why you would not see a long queue at banks in Uganda, as most transactions are done on the mobile money platforms. You can pay anyone, anywhere with your mobile money. It is so accessible and widely embraced that Ugandans pay for everyday bills such as transport fare, taxes, loan repayment, daily contribution, visa fee, airline tickets, and supermarket bills, etc. International transfers within east Africa are also available at an affordable rate on this platform. Many mobile money providers even offer credit facilities. MTN Uganda for example offers as high as One million UGX loan depending on how much you have been saving on your mobile money account. Is that not beautiful?

 Affordability: Deposits attracts no charges. Withdrawals and other transactions like bill payment, local transfers attract a maximum of 1% of the amount.

 Security: In Uganda for example, a relatively adequate KYC is done before a mobile line can be registered. A primary ID, visa documents, and bio-metric capture are mandatory. This makes the mobile money platform to be fully secured.


So after my experience in East Africa, I have been wondering: why it has not been a success in Nigeria? Even our neighbour, Ghana has recorded a landslide success in the usage of mobile money, 61% of Ghanaians are actively using mobile money.

Despite the huge number of mobile money service providers in Nigeria, yet very few people are using it. What is the challenge?


Is it CBN bureaucracy? Is the process being sabotaged by Nigerian “mafia” banks? Are Nigerians not just ready for a change? These are questions we need to ask ourselves.

I saw a draft by CBN to establish payment service banks meant to improve financial inclusion. After reading the draft, I concluded this is just “business as usual”, just like Nigerian Microfinance Banks. The proposed PSBs is not the ultimate solution to financial exclusion, mobile money is a more suitable solution.


Written by henryoster

Admin at Microfinance Arena

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