Ade Ayeyemi, the CEO of Ecobank, stated in The Africa Report that the Covid 19 pandemic is likely to accelerate the transition to digital financial services in Africa. The continent’s mobile money accounts had reached $1 billion, with West Africa leading the charge. During the same time, Deposit Money Banks (DBMs) in Nigeria, reported an increase in e-payments earnings. Mobile money is already an innovation within the continent; however, due to this pandemic, it will become a ‘great accelerator’ encouraging the adoption of new technologies in Africa.
Mobile Money Providers across Africa have lowered or suspended transaction fees and governments are promoting digital payments to eliminate person-to-person contact. Africans are being urged to switch to digital payments in order to reduce the risks associated with exchanging cash. Sub Saharan Africa, where many countries and major business hubs are also in lockdown, it has encounter an increase in the use of mobile money and digital financial services. This has resulted in major growth projections for many key industry players in the region. Prior to this, the GSMA 2019 report indicates that mobile money usage across the Africa was already showing major growth indices.
Now in this new era of Covid 19, the continuous need to have access to funds, coupled with an increased need for physical distancing, has created a gap that has been filled by non-physical method of payment. Industry experts and analysts said that the outbreak in West Africa could be an opportunity to increase the use of mobile money and involve more people in the digital economy. According to a report from the World Economic Forum, it has been said that mobile money has hailed as a way for people who are unbanked, including women, youth and the rural poor to access services such as savings and loans, start businesses and receive payments.
Adhering to the social distancing rules, the need for digital financial options, including contactless payment systems and mobile money services, is even more expedient. While coronavirus gave people a new incentive to go digital, operators also lowered barriers by making it cheaper and easier to sign up in some places. Digital Financial service providers are playing an increasingly appreciable role in reducing entry barriers, which previously gave rise to financial exclusion. For example, in the East African countries, Safaricom has implemented a fee waiver on M-Pesa service to reduce face-to face interactions in response to the Covid 19 Outbreak.
Taya Oviosu, the CEO of Nigerian mobile money company Paga, with 15 million users, said he expected an upswing in new accounts and transactions after fees were lowered to help people prevent cash. Despite the pandemic and shutdowns, this sector is still making inroads. Paga has doubled to some 14000 the number of merchants, like restaurants and shops which accept payment on the platform, said Oviosu. The company says it has also witnessed a 200% quarterly increased in users. Ruan Swanepoel, the Head of GSMA’s Mobile Money Program said that he has observed a fall in the cash-in and cash-out transactions during lockdown and is expecting an overall increase in the number of mobile money account holders.
As the coronavirus spreads, governments and businesses struggling under the weight of the pandemic are seeking to limit cash exchanges that the World Health Organisation has warned could transmit the virus. Mobile money has proven to be an alternative.
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