Until a few years ago, a typical family of Kenyan farmers lived with constant uncertainty. Periodic drought would throw them back into poverty, and with no access to banks—no accounts, loans for crop inputs, nor insurance to protect their harvest—they were powerless to change the cycle. But then came an unexpected savior. A basic mobile phone with late-1990s-type features is now helping them save money, borrow to buy seeds, and insure crops. More importantly, phones are enabling “financial inclusion” for the country as a whole—deemed by the World Bank as crucial to reducing poverty and jump-starting economic growth.
And while mobile money services are available in 89 countries globally, nowhere are they having more of an impact than in Africa, where 12 percent of adults have mobile money accounts, compared with 2 percent worldwide. In Kenya, a whopping 59 percent of the adult population actively uses mobile money services, with transactions of $2.2 billion per month. Here’s a look at some of payoffs of the mobile-money economy in different regions of Africa, bringing a measure of financial stability where it’s critically needed.
Zimbabwe: Instant, Low-Cost Crop Insurance
As Zimbabwe emerges from a decade-long economic recession, the strength of its agricultural sector, upon which 70 percent of people depend for their livelihood, is key to recovery. EcoFarmer is the country’s first micro-insurance product designed to help farmers protect their crops against drought or excessive rain. Using mobile money, subscribers pay 8 cents a day for 125 days and are guaranteed a harvest or at least $100 for every 10 kilograms of seed they plant, regardless of weather conditions.
Rural farmers have, until recently, lacked the technical and market information they need to increase yields and incomes. EcoFarmer users receive daily weather information, market prices for crops and tips on when and where to sell directly to their phones.
Tanzania: Interest Payments, At Long Last
Mobile money subscribers in Tanzania today are finally getting what the rest of the developed world has enjoyed for centuries—interest payments on deposited funds. Last year, telecom company Tigo launched Tigo Wekeza—Swahili for “Tigo Invests”—to 3.5 million customers. It’s the first-ever service that pays returns on subscribers’ balances. The real shocker here? Customers are offered rates between 7 to 9 percent—far more than what most banks offer today, in any country.
Tigo customers get an SMS message each time payments are due, and the money drops directly into their account. “These savings accounts are very innovative and something that we haven’t yet seen in Europe or the U.S.,” says Alix Murphy, senior mobile analyst at WorldRemit, a London-based online payment transfer platform. “I’m not getting any interest in my bank account now. I’m not sure why I still have one.”
Zimbabwe: Better, Cheaper Cash Flow with Family and Friends
In Zimbabwe, there’s a fast-growing market for mobile-to-mobile remittance services—sending money to family and friends back home—from providers like WorldRemit. Subscribers send and receive payments directly on their phones, and pay far less in transfer fees—about 4 percent, compared to as much as 12 percent through a traditional service like Western Union. In Zimbabwe, 70 percent of WorldRemit customers receive money on their phones—a higher percentage than in any other country.
These wallet-to-wallet transfers are more than convenient: they’re helping Zimbabwe families stabilize income and letting senders play a more involved role in their lives back home. People typically send smaller amounts more frequently, Murphy explains, with the details discussed via their WhatsApp or Viber conversations. “It’s about paying for small things that are helping in people’s daily lives rather than just in massive chunks every couple of months.”
Ghana: Life and Health Insurance in Your Pocket
In Ghana, mobile phones are helping low-income consumers manage risk—many for the first time in their lives. “The mobile payment channel allows people who have very little liquidity to be able to afford insurance,” says Mathilda Ström, deputy CEO of Bima, a Stockholm-based provider of mobile-delivered insurance and health services in 14 emerging markets.
Bima customers register for life insurance and pay micro amounts—2 cents a day on average in Africa—straight from their phones. Without mobile, insurers wouldn’t be able to go out and collect such small payments frequently, and customers wouldn’t have enough cash on hand to make larger payments, Strom says. In Ghana, Bima offers several health insurance coverage options, including family care and hospital stays, and it just launched a telemedicine service. “The way we see [mobile microinsurance] heading is creating an à la carte insurance menu for the bottom of the pyramid in the future,” says Strom, adding that customers in the future might be able to insure against specific diseases like malaria.
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