Apart from greatly easing communication, mobile phones have also been instrumental in facilitating trade and commerce.
Over the past few year, mobile phones have played an important role in Africa’s growth story. Apart from greatly easing communication, they have also been instrumental in facilitating trade and commerce. Most Africans use mobile financial services to buy goods, pay utility bills, send and receive money. PCWorld reports that Mobile money transfers in Africa are expected to hit $33 billion this year.
The role of mobile phones is poised to boost regional growth in the coming years as mobile phone technology gets adopted into other sectors such as international money transfer. This comes on the back of the South African Reserve Bank’s approval of Zimbabwean mobile telecommunications firm Econet Wireless’s bid to start a cross border remittance service from South Africa through its EcoCash service.
In a press statement released in June 2015, Econet Wireless said the approval from the South African Reserve Bank is set to allow Zimbabweans living in South Africa to send money directly to any Econet Wireless number anywhere in Zimbabwe using. EcoCash is a mobile payment solution that enables Econet customers to complete financial transactions using their mobile phones.
This development is likely to improve livelihoods of Zimbabweans as they will be able to receive remittances from relatives who work in South Africa through their mobile devices. In addition to this, the cross border exchange of remittances through mobile devices may also provide the much needed financial injection for business start ups in Zimbabwe and contribute towards steering forward the Zimbabwean economy.
Moreover, if similar techniques continue to be adopted on a larger scale by mobile networks across Africa, cross border mobile cash transfers can become an easy method through which entrepreneurs, small scale and emerging businesses can conduct cross border financial transactions through their mobile devices.
This is in light of World Bank estimates which state that Africa has an 80% unbanked population. The Pew Research Centre’s Spring 2014 Global attitudes survey states that 80% of Africans own a mobile phone and the number of African people with cellphones is on a rise. This growth of mobile cash transfer services is likely to benefit many African people and enable the large unbanked population to complete financial transactions.
In addition to this, cross border mobile cash transfer services will increase the speed at which remittances are sent between countries and may speed up the growth of businesses that benefit from these financial transactions. This is noted in how Econet Wireless predicts that their new service will fundamentally alter the pattern of remittances which today is characterized by large, lump sum transfers of around R1 000 being sent monthly or every several months.
“The approval, which took over eighteen months to secure, will come as a major relief for Zimbabweans working in South Africa, as it takes out the hassles and challenges of sending money to relatives. It will be as accessible, quick and convenient as making a “Cash-In” to EcoCash in Zimbabwe,” reads part of the Econet statement. The report further states that Zimbabweans living in South Africa will be able to send remittances of even less than R50 at affordable rates.
The uptake of mobile cross border remittance services at regional levels will enable emerging African entrepreneurs to venture into small scale cross border investments by financing cross border branches of their businesses and expanding the reach of their services.
Furthermore, sending remittances through mobile phones could allow for the penetration of rural or remote markets wherein which banks are scarce. Remote recipients of mobile remittances can complete financial transactions with their locals using their mobile phones without having to travel into cities to withdraw physical cash.
This development will go along way in easing liquidity challenges in poor economies. The onus lies upon the recipients to think innovatively and channel these capital resources to improve their local economies.
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