Mobile money and the next phase of financial inclusion

By Aminata Kane, Head of Mobile Money for Africa and the Middle East, Orange

The financial inclusion rate may be rising, but parts of Africa and the Middle East still lag substantially behind other regions. That said, nearly everyone has a phone which allows them to transfer and save money. Orange alone manages roughly 100 million mobile wallets across Africa. Mobile money has become a necessity for unbanked customers; their only way of transacting, saving, running a business, or getting a loan.

Telecommunications companies are good at equipping people with phones, but the real question is: how do we get people to transact with them? Emerging economy populations are still heavily dependent on cash. Directing more resources to digital financial education and advocacy can help, but that’s not enough. We also need to apply mobile money services to local needs.

We recently tested a QR code payment system in market in Senegal and Ivory Coast. Customers can pay merchants simply by scanning their QR codes. The QR code links to the merchant’s phone number, directly transferring the money into his/her mobile wallet. Merchants avoid hefty transaction fees while customers avoid carrying cash to the market. It also helps merchants build up a mobile money credit history to qualify for small loans.

These are the sorts of issues mobile innovation should be looking to solve. But solutions don’t come from Paris, Casablanca or London. They come from real people with real struggles. If we want to embrace mobile money’s potential, we need to keep our eyes on ears on the ground and accept that mobile money is not a one-size-fits-all business.

The role of central banks and financial regulators will be critical

FinTechs do wonders for the mobile money sector. They drive innovation and increase competition. But not all comply with the standards set by central banks. This makes it tough for players who do comply, to compete. Regulatory compliance needs to be applied to all players equally, and the same goes for interoperability. It’s vital that all industry players – from mobile money operators to FinTechs, microfinance institutions, and banks – are connected. But interoperability needs robust regulatory oversight to operate fairly and fluidly. Here, central banks and regulators can play an important role.

A stronger push by governments to use mobile money will also go a long way. By selecting mobile money as the preferred option for dispersing government financial support and paying tax, governments can really help drive the digital transition.

People, especially vulnerable populations, may be reluctant to switch to digital because they don’t want to be traceable and eligible to pay taxes. But it’s our job to prove to them that mobile money can also make life easier.

How can we drive the uptake of mobile money?

One thing we’ve done at Orange involves launching microloans across several African countries. So far, we have 1.3 million microloan customers in Cote d’Ivoire alone. Anyone who needs a microloan (entrepreneurs, young people, merchants) can walk into Orange Bank Africa in Abidjan and get an instant loan based only on their mobile money credit history. No formal credit history is required. The loan immediately reflects in their mobile wallets (anything from USD 100 – 2000) and they can pay it back within 30 days, depending on how much they borrowed.

This is an extremely strong tool for financial inclusion because even if you don’t have any money today, you can borrow just enough to buy your product, sell it at a small profit, and be back on your feet tomorrow. It gives vulnerable people the head start they need to have a chance at life. But it also provides an incentive to use mobile money instead of cash, because you need your mobile wallet data to be able to qualify for a loan. I really think this reflects what the next phase of financial inclusion should look like.