Development of m-banking in Africa

Success of a country’s economic performance strongly depends on money circulation. In Africa citizens who live in rural areas rely on money sent home by members of their family who work in towns and cities. Sometimes delivering cash to a certain place could be a difficult job to do since villages are located hundreds of miles apart. In Kenya, for example, workers in urban areas hand wages over to bus drivers, who promise to stop off at the worker's home village en route to their destination.

Services development has the potential to let people transfer cash by text message to other mobile phone users and attract those not involved in m-banking and give them their first access to financial products. Instead of using a bank branch, these services rely on local retailers who already sell mobile top-up cards.

"We wanted to offer something that would work," said Mung Ki Woo, Orange's m-payments division head. "Instead of giving people a plastic card, why not use something many people already have: a mobile phone? And instead of doing transactions at a bank branch, why not let people go to their local retailer to deposit and withdraw cash?"

Only 7% of Ivory Coast population possesses a bank account. In March 2007 the company, whose owner is France Telecom, launched Orange Money throughout the country. 

This service allows people to deposit cash through Orange's network of local retailers and send it to other registered Orange Money customers, who can then withdraw it through their local store.

UK-based Monitise has spent the past five years developing technology that makes any mobile phone as secure as a cash machine. The company, formerly MChex and spun out of the technology firm Morse last year, has already clinched a crucial deal in the UK with the Link network and several of its partner banks to offer the technology for mobile banking services.

Monitise wants to build a service that functions whether or not a person has a bank account, regardless of which bank they use if they do have an account, and that can be accessed by customers of any mobile phone network.

"Basically, we are working with the banks to extend their model outwards from the small number of people who have access to banking services into the far larger number of people who have a mobile phone," explained its chief executive, Alastair Lukies.

Another penetration to the African market had been conducted by Vodafone with its M-Pesa service. It had been launched by Vodafone's Safaricom unit in Kenya during the previous year. M-Pesa has well over 2 million customers and every year 200,000 new customer are signing up to its services. Just  like Orange Money, it uses the network of thousands of local retailers who sell airtime top-up cards to act as a branch network, but registered M-Pesa customers can send their deposited cash to a mobile phone user on any network.

In addition Orascom, operating in such countries as Algeria, Tunisia, Egypt and Zimbabwe - recently announced plans to develop m-banking across its markets and MTN. This is the continent's largest mobile phone operator and already has a service up and running in several areas. In South Africa a start-up called Wizzit has been providing mobile banking services, including a debit card, in partnership with a local bank for three years.