In network: Mobile money fills the gaps left by traditional banks


When it comes to widespread access to financial services, no other mechanism has been able to compensate for the shortcomings of the traditional banking system like mobile banking services. As mobile operators have expanded their offerings, such as the transfer of money between telecoms users, mobile money has become a lifeline for traders, independent businessmen and isolated populations across West Africa.

Mobile money transactions in Côte d’Ivoire rose from CFA4.5trn ($7.7bn) to CFA6.3trn ($10.8bn) between 2016 and 2018. The segment has also shown significant progress on a regional level. Eight mobile money providers operate across five countries within the region, with the volume of transactions reaching CFA20.5trn ($35.2bn) as of late 2018. This marks a 30.4% increase on 2017 figures, according to a 2019 report from the Banking Commission of UEMOA. Over the same period, the number of mobile banking accounts in the union expanded from 31.8m to 37m.

The measure of existing mobile accounts can be deceiving, however. “When we analyse these accounts, some of them have no activity. Globally, the important thing is that these new distribution methods, like mobile banking, allow for increased inclusion,” Ismael Fanny, deputy executive director of the Association of Banks and Financial Establishments in Côte d’Ivoire, told OBG. Of the UEMOA-wide total, 50.9% were considered active accounts – an uptick nonetheless from the 48.4% of accounts classified as active one year earlier.

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Rather than compete with the existing banking offer, mobile money is filling the gaps left by traditional banks, which is helping to address the issues of financial inclusion in Côte d’Ivoire and the wider region. Since mobile money services tend to be relatively basic when compared to the offerings of traditional banks, they are helping to bring more first-time users and businesses into the formal financial sector. The expansion of mobile banking services is therefore taking place alongside, and not necessarily in competition with, the traditional banking system. The continued growth of telecoms services – with a SIM card penetration rate of 150% as of the fourth quarter of 2019 – coupled with the simplicity of mobile banking offers has allowed millions of users to access financial transactions. According to data from the third quarter of 2019 from the Telecommunications/ICT Regulation Authority of Côte d’Ivoire, the number of mobile money accounts in the country roughly doubled from 8.6m in September 2017 to 16.6m two years later. By the third trimester of 2017 the market leader by share of the total mobile money accounts was Orange, with 42%, followed by MTN with 35% and Moov at 23%.


At the moment, the growth in traditional banking and new channels are intertwined. Indeed, mobile money typically has had a palpable financial impact on banks since it serves a conduit for deposits: according to current legislation, mobile money providers are obliged to back digital currency through deposits in traditional banks. This 100% coverage requirement stems from the fact that mobile money providers are not considered by the regulator to be banking institutions.

Despite the rising acceptance of mobile banking and its enabling role in raising financial inclusion, there have been warnings of rising costs for consumers. In February 2019 the Confederation of Ivorian Consumers reported that tariffs for mobile money transfers in Côte d’Ivoire had increased by 7.2% in the space of a year, prompted by higher taxes for non-telco operators, which were then passed on to consumers.

The nature of mobile transfer operations highlights the avenues for increased growth across West Africa. In 2018 cash recharges amounted to 37.7% of total transactions. Cash withdrawals accounted for another 31.2% of the volume. The payment of goods and services represented just 5% of mobile transactions, while intra-regional transactions accounted for a mere 4.5%. There remains considerable room, then, for mobile operators to widen the provision of these services.