Ivan Kiryowa is nervous. He’s waiting for money from a friend. He checks his phone frequently. Kiryowa lives in Uganda, one of the world’s poorest nations. But within 30 minutes, Bing! $150 lands in his account. Mobile money is the up-and-coming way to move currency—no matter where you live.
Mobile money is an electronic wallet service. Users can send and receive funds using a mobile phone. And in parts of Africa, it’s quickly replacing regular bank accounts.
Phone in hand, Kiryowa saunters into a hardware store and buys cement. “Mobile money is convenient for many of us who rely on our phones to pay bills and make transactions without having to go to the bank all the time,” he says.
Easy, Safe, Cheap
Mobile money is more than convenient. It’s less expensive than many other forms of sending money—especially to other countries. And it’s safe. People needn’t carry loads of cash around.
In Africa, only about 34% of adults have bank accounts. But more and more own handheld devices. Mobile money helps reach “unbanked” Africans—especially in areas where banks are few and illiteracy is high.
How Mobile Money Works
M-Pesa is one of Africa’s most popular mobile money companies. M stands for “mobile”; pesa means “money” in Swahili. M-Pesa keeps things simple. Users don’t need a smartphone, high-speed internet, or an app. Any phone that can send a text message can send mobile money.
Here’s how M-Pesa works:
–Users register with an M-Pesa agent at a local store.
–Users give the agent cash to load as credit onto their phones.
–Users send texts with the receiver's phone number and the transfer amount.
–The receiver either stores the money in his own M-Pesa account or collects the cash through an agent.
African Way of Life
People in Africa now commonly use phones to pay bills, buy bus tickets, and even help friends in distress. Experts say the African continent has 84 million active mobile money accounts. In Uganda, mobile money has exceeded cash pick-up and bank deposits as the preferred method to move funds.
In the East African capitals of Kampala (Uganda) and Nairobi (Kenya), booths offering mobile money services dot the streets. Some taxes can be paid by phone.
A Hitch
During a disputed presidential election last year, the Ugandan government shut down the country’s social media outlets. That included blocking the mobile money network. Millions of customers had no access to funds.
The four-day shutdown offered a “natural experiment.” It tested the impact of life without mobile money in an African country.
Electricity, water, and school bills went unpaid. Services often ended as a result.
That’s a downside: Trouble with the network can cause big problems.
Still, developing countries worldwide see economic promise in mobile money. And Africa is leading the way.
