MOBILE
Like tens of thousands of others, Jenny* originally from Zimbabwe, is working in South Africa to support her family back home.
Without a traditional bank account, she has had to find innovative ways to send her earnings back to Zimbabwe for her family.
Generally, she and others like her send money home by bus. The canny bus drivers charge ZAR30 for every ZAR100 entrusted to them for delivery.
If people wish to circumvent this system, they hide money among the groceries they also send home by bus.
Banknotes are rolled up and hidden in bags of sugar, petroleum jelly containers and in the pockets of clothing sent home.
The problem with this system is that the bus drivers are wise to it. Jenny reports that the drivers search groceries in transit for resealed packets of flour or washing powder and remove the money.
“
Sometimes, they just give my family another box of washing powder and say –
there, this one is the same. Then all my money is lost,”
Jenny reports. She earns just above minimum wage in South Africa and can ill-afford to lose any of it.
The migrant workers have to get ever-more inventive about how and where they hide their money to avoid paying the exorbitant 30% transport and safekeeping fee. Jenny says she has been known to hollow out bars of laundry soap to hide money in them.
For Jenny and millions of others working far from their families –
both in their homelands or across borders, sending money home has been a major problem and the process has eaten significantly into their often meager earnings.
The unbanked problem
While money transfer services are available via banks, millions of Africans do not have bank accounts. The reasons for this are varied: they are migrant workers, they do not earn the minimum amount required by banks to open an account or they live in rural areas where bank services are inadequate. On the other hand, the number of active mobile phones in use across Africa far outstrips the number of bank accounts.
Aite Group said in a report that people living outside their country of origin sent nearly USD400 billion in remittances around the globe in 2008. Mobile Money Transfer reports that over 175 million migrants currently use remittance services, sending money to over 800 million recipients. According to Western Union, this already vast global migrant population is expected to grow from 191 million in 2005 to more than 280 million in 2050.
Mobile to the rescue
For the hundreds of millions of migrants and unbanked, the mobile phone is proving to be a lifesaver.
In countries across Africa, mobile money transfer services are taking banking to the unbanked, cutting the costs and the risks associated with transferring money across long distances.
These services, rolled out in partnerships between mobile service providers and banks or retail chains, allow the unbanked to send and receive money and pay bills, affordably and easily, using simple mobile phones.
Pioneer service M-Pesa was launched in Kenya three years ago after a pilot by Vodafone and the UK Department for International Development. Just over a year later, Kenya’
s Safaricom, part-owned by Vodafone, reported that M-Pesa’
s cumulative person-to-person transfers had already topped USD682 million.
M-Pesa is now used by over 10 million people in Kenya, Tanzania and Afghanistan, and the number of users is snowballing as the service is expanded to other countries across Africa. M-Pesa is also expected to roll out international transfer services soon.
According to Wikipedia, the system was developed and run by Sagentia from initial development to the six million customer mark. The service has now been transitioned to be operationally run by IBM Global Services on behalf of Vodafone, while the initial three markets are hosted by Rackspace.
Airtime resellers and retail outlets serve as the banking agents, making banking possible even where there are no banks.
M-Pesa users can also withdraw their cash at Kenya’s Equity Bank ATMs. The country’
s Family Bank has also tied in its services with M-Pesa to offer mobile money transfers.
M-Pesa recently won the award for Best Mobile Money Service at the 15th Global Mobile Awards at GSM Association’s Mobile World Congress in Spain.
Vodafone Group Head of International Mobile Payment Solutions Nick Hughes, credited with designing the system, said the rapid uptake of the service was mainly due to the previous lack of low cost money transfer systems for the unbanked.
Snowballing services
Mobile money services are now snowballing. While cross-border transfers are not yet commonplace, they are likely to follow hot on the heels of the roll-out of long-distance mobile money transfer services across the continent. Regulators and banks in some countries have hampered the launch of mobile services, but the mobile money wave is likely to spread eventually, regardless of objections. It is just too good a solution to stand in its way for long.
Plans are afoot to expand the M-PESA product to Egypt and India, while in South Africa, mobile service provider Vodacom is rolling out the M-Pesa service in conjunction with Nedbank.
South Africa’
s First National Bank also recently launched a send money service that allows people to send money to recipients using just ATMs and mobile phones.
South Africa’
s Absa Bank and Western Union (WU) have just launched a transfer service that allows for cross-border money transfers via branches, the internet and via mobile phones.
Earlier this year, Egypt’
s central bank granted BNP Paribas preliminary approval to launch a mobile money transfer service via operator Mobinil. The licence would allow registered users to transfer money via mobile phones for the first time, said BNP. This was expected to be a boon in a country where only around 8 million of people have bank accounts but there are 55 million mobile phone subscriptions.
Last year, mobile operator Zain began working with Western Union to deliver a mobile money service called Zap in 22 countries across Africa and the Middle East.
Mobile phone operator MTN’
s MobileMoney service is now available in Cote d’
Ivoire, Ghana, Benin, Cameroon, Nigeria and Uganda. It’
s being rolled out in all countries where MTN operates.
In Uganda, MTN recently marked its first 15 months of offering the service there. It announced that nearly 900 000 people were now using the service, having made 11.8 million transactions totaling around USD195 million since its launch. MTN Uganda expects to have around 3.5 million MobileMoney users by 2012.
This month, telecoms operator Orange launched its mobile payment service, Orange Money, in three more African countries: Senegal, Mali and Madagascar. It already has a service in Cote d’
Ivoire.
The list goes on. Banks and mobile operators are rolling out a variety of mobile money transfers in growing numbers, offering more varied services and extending their reach across borders.
For the unbanked, an expensive and risky money transfer process is coming to an end. At last, most of their hard-earned cash will reach the intended recipients quickly and easily.
For people like Jenny, being able to send money affordably and securely using her mobile phone takes a weight off her shoulders. “
It’
s better. The old way is not safe and it’
s very expensive. Sometimes I had to buy lots of things without my budget, just to hide my money in it. If I use my cell, it’
s easier, and cheaper,”
she says.
* Name changed
