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Harnessing Mobile Connectivity to Promote Financial Inclusion in Sub-Saharan Africa

The Global System for Mobile Association (GSMA), a trade body that represents more than 750 mobile network operators globally predicts that more than half the population of sub-Saharan Africa will subscribe to a mobile service by 2025. The association further opines that the region’s current mobile penetration rate of 44 per cent of the population is significantly below the global average of 66 per cent. Consequently, the questions that come to mind include, ‘’Why is mobile penetration important?’’ and ‘’How should stakeholders act to attain higher penetration rates?’’. 

Providing financial services to the last-mile segment requires concerted efforts of multiple stakeholders. Financial service providers are continuously innovating in order to reach the unbanked majority who comprise 63 per cent of total sub-Saharan population according to the World Bank. Innovation in financial services is most often synonymous to digitization or the continued adoption of and leveraging technology (mobile phones) to deliver financial and non-financial products and services. In this blog, we look at one basic but critical component - the mobile connectivity, which contributes to the success of digitizing financial services. Specifically, we look at the mobile connectivity situation in Kenya and make comparisons to the situation in sub-Saharan African region. We also attempt to evaluate why the mobile telephony infrastructure is key to the successful launch, scale of products and services, and finally, give a few pointers to comparable sub-Saharan African countries i.e. important lessons in light of the aggressive innovations taking place across the sub-Sahara Africa financial and non-financial markets. 

Mobile Connectivity in Kenya and Sub-Saharan Africa.

According to F5 Networks, a global company specializing in developing application services and application delivery networking, connectivity is the ability to connect mobile devices, such as a cellular telephone to the network. Owing to the technological developments, connectivity is no longer a “nice-to-have” but a necessity for organizations the world over. In an attempt to deliver financial services to the excluded last mile, the banking sector has fast moved most of its service delivery from the banking halls and into the palm of customers by leveraging the mobile phones hence validating the assertion. GSMA experts predict that mobile connectivity will contribute to reducing poverty, improving healthcare and education, thus driving sustainable economic growth  coupled with improved efficiencies. Through leveraging services such as messaging, mobile money and machine-to-machine technology (M2M), organizations will be able to deliver scalable and commercially viable services.

As such, we cannot be over emphasize the importance of mobile connectivity. GSMA estimates that there were 444 million unique mobile subscribers in sub-Saharan Africa and 747 million SIM connections in 2017. By December 2018, the sub-Saharan region reportedly had 395.7 million Mobile Money accounts, representing 45% of global figures and remains the highest globally. However, a few nations such as Kenya, Uganda, Zimbabwe, Gabon and Namibia contribute to the high number of accounts.


Overtime, industry experts have attempted to resolve the hindrances to achieving higher mobile connectivity across the world. There exists ongoing efforts to facilitate the connection of each country's offline population to the internet via mobile. This has resulted in the development of an index premised around four key enablers of mobile internet connectivity: infrastructure, affordability, consumer awareness and content. In Figure 1, the Researcher compares Kenya, a leading country in mobile penetration and its associated applications (including mobile money) versus the rest of sub-Saharan Africa. The graph depicts that the rest of the region lags concerning the key four enablers necessary in laying foundation to support widespread adoption of the mobile connectivity and its associated applications.


The illustration (Figure 2) shows the variance between one of the key enablers, the infrastructure situation in Kenya and the rest of the sub-Saharan Africa region. The illustrated differences provides possible reasons as to why innovative implementations in the rest of the region take longer than expected to initiate and realize the desired impact. Here, a comparison of metrics such as network coverage, network performance, and the generation of mobile broadband Internet shows the rest of sub-Saharan Africa is significantly trailing behind Kenya.



Why is this important?
There are increasing efforts by various stakeholders including the Mastercard Foundation to transform the lives of rural people in the sub-Saharan Africa. The Fund for Rural Prosperity, a USD 50 million-challenge fund is one such transformative intervention. The program targets the rural populace (a majority in sub Saharan Africa) through funding innovative agri-businesses, fintechs and financial service providers across the region. The grant, extended on a promise to implement innovative business models and improve access to financial and non-financial services for smallholder farmers ultimately resulting in improved livelihoods. 

However, the realization that these innovator efforts may come a cropper if basic infrastructure required to support their innovation is unavailable signifies the importance of the subject matter. MicroSave, in a previous publication dubbed the Digital Divide, illuminate the drivers to financial exclusion. These include inadequate infrastructure to support fintech, lack of phones among the populace, high illiteracy leading to inability to manipulate the mobile transactions, enabling environment for the innovations, and the overly commercial perspective focus by financial service providers.


A quick assessment of the FRP portfolio of projects - totaling 37 across 15 countries in the sub-Saharan region reveals varying levels of ecosystem readiness as far as implementing their innovative business models. This is in spite most supported businesses leveraging technology to deliver its products or services. Ultimately, this basic infrastructure will have a telling impact as far as the projects’ desired impact is concerned.




We predict that mobile connectivity and its associated benefits will result in increased production, increased incomes, and overall improved livelihoods. Specifically, the connectivity will allow for effective communication thereby decreasing unproductive travel time. Availability of 3G and 4G technology will enable access to internet-related services, albeit intermittently resulting in increased access to market and general agricultural information for the agriculture sector and payments services. Ultimately, we anticipate sectoral advancements buoyed by affordable innovative services and products.

Way forward and a call to action.

Despite all the gains in mobile connectivity, it is still surprising that almost two-thirds of the sub-Saharan Africa region lack mobile connectivity. Going forward, countries and service providers operating in this region are encouraged to consider the following recommendations in bridging the connectivity gap:

  • A shared Mobile Network infrastructure. Financial service providers are largely for profit making organizations. They seek to make viable investments resulting in higher Returns on Investments within reasonable periods. As such, providers are encouraged to leverage both passive and active infrastructure of established operators in delivering services to the underserved areas. Kenya has witnessed the entry of Mobile Virtual Network Operators (MVNO) such as Equitel operated by Finserve Africa Limited hosted by Airtel Kenya Limited and independent tower companies such as Eaton Towers leading to increased incidences of shared infrastructure in cost-effectively delivering financial and non-financial services. 
  • Stakeholders must deliberately enhance the users’ and potential users’ digital skills and content. UNESCO estimates that 27% of the 750 million illiterate adults live in sub-Saharan Africa. This implies that this growing segment cannot read, write or manipulate mobile related transactions without support. Providers must therefore invest resources to train both users and operators with a view to shortening the adoption periods for mobile driven products and services. This clearly moves away from the technology adoption theory, which recommends allowing technology adoption to happen at its own pace based on use cases. 
  • Simplifying mobile payments regulations to ensure the stakeholders compliance. Basel III, the international framework for prudential supervision of banks, recommends a three-pillar approach to regulation. These include an observance or enforcement of minimum standards, dynamic supervision and encouragement of disclosure in order to provide innovative financial products and services. Regulators are encouraged to work closely with implementation partners to ensure an enabling regulatory environment, which ultimately hastens the development in the industry. An example of enabling regulations is the non-exclusivity of agents, which promotes leveraging existing agent network and infrastructure to offer additional or competing services and products.

Ultimately, the questions ‘’Why is mobile connectivity important?’’ and ‘’How should stakeholders act to attain higher penetration rates?’’ remain relevant to all concerned financial inclusion stakeholders since a lot hinges on the mobile network connectivity. 

Blog post written by Kevin Genga, Project Manager, Mastercard Foundation Fund for Rural Prosperity.


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