Authors: Nellie Peyton
Affiliated organization: Thomson Reuters Foundation
Type of publication: Press Article
Date of publication: April 2020
Penda Kande usually pays for taxis in cash, but since coronavirus hit Senegal, the 30-year-old nurse has switched to mobile money to avoid contamination.
She was one of several clients making withdrawals or deposits with mobile money agents on a street corner in Senegal’s capital Dakar last week, where one Orange Money agent said business had nearly doubled since coronavirus hit.
Mobile money providers across Africa have reduced or waived transaction fees and governments are encouraging digital payments to reduce person-to-person contact and potentially slow the spread of the virus.
In West Africa, where mobile money is growing fast but still used by only about one in four adults, industry experts and analysts said the outbreak could be an opportunity to increase usage and include more people in the digital economy.
“In West Africa, where mobile money is growing fast but still used by only about one in four adults”
Mobile money has been hailed as a way for people excluded from the formal financial system including women, youth and the rural poor to access services such as savings and loans, start businesses and receive payments.
But mobile money arrived later in West Africa, where barriers include low literacy and lack of trust as well as lack of necessary documents and a preference for cash, according to the telecoms industry group GSMA.
“I do believe this could be a catalyst for high adoption,” said Ruan Swanepoel, head of the GSMA’s mobile money programme, citing government efforts to encourage digital payments and ease regulation as deciding factors.
In one example, Ghana’s central bank announced that all mobile phone subscribers could open a mobile wallet and transfer up to 1,000 cedis ($170) daily without providing additional documentation.
Required documents such as ID and proof of address vary by country but can be a barrier particularly for women to open accounts, said Sabine Mensah, regional digital lead for the United Nations Capital Development Fund (UNCDF).
Lowering the barriers
Lowering the barriers for mobile banking can also help people weather the economic impact of the outbreak, said Alfred Hannig, executive director of the Alliance for Financial Inclusion, a global network of policymakers.
“If you want to mitigate the crisis, digital financial services for the poor is definitely an avenue to look at,” he said.”
As countries around the world consider digital payments as a way to get money to citizens during the pandemic, lack of financial inclusion is a major barrier, said the Center for Global Development think tank in a report released on Tuesday.
“We found that the lack of bank and mobile money accounts is the biggest gap in digital readiness. It’s hard to get money to citizens who don’t have either,” said Anit Mukherjee, an author of the study.
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