Cash still dominates sub-Saharan domestic remittances but mobile money on the rise

Cash still dominates sub-Saharan domestic remittances but mobile money on the rise

Cash still dominates the domestic remittance market in sub-Sarah Africa but the mobile phone is becoming an increasingly popular alternative, with Kenya, home of M-Pesa, leading the way, according to research carried out for the Bill & Melinda Gates Foundation.

The foundation commissioned pollster Gallup to carry out face-to-face interviews with 1000 adults in each of 11 sub-Saharan countries: Botswana, Congo, Kenya, Mali, Nigeria, Rwanda, Sierra Leone, South Africa, Uganda, the United Republic of Tanzania, and Zambia.

Around 53% (the equivalent of 134 million people) reported that they had paid, or been paid by, a counterparty in a different part of the country within the previous 30 days. The majority of those sending or receiving money and 31% of the total (79 million) still only use informal cash, sending it by bus or travelling friends, or simply carrying it themselves.

In contrast, sub-Saharan Africans are far less likely to have used only electronic payments such as bank transfers, mobile phone transactions or Western Union-style services: only nine per cent (roughly 22.7 million) say they made their payments this way. Around 33 million (13%) use a combination of electronic and cash while 47% (118.4 million adults) make no payments of any kind.

The survey reveals huge discrepancies between countries though and points to success stories that could presage a wider move away from cash: two thirds of Kenyans have used their mobile phone to send money to family members or friends living in a different part of the country while neighbouring Uganda and Tanzania boast 43% and 31%. However, these three are way ahead of the other eight nations covered in the survey, with no more than four per cent of respondents in any country sending or receiving money through their handsets.

Where mobile money services are used though, the survey reveals that they prove particularly popular with the rural and poor populations. Adults from rural areas and villages who sent domestic remittances 30 days prior to the survey were more likely to have sent this money via mobile phone transfer (28%) than those living in urban areas (13%). Remittance senders living on less than $2 a day were about as likely to have used mobile phone money transfers as those living on more than $2 a day (21% vs. 23%).

With 55% of adults owning a mobile phone and another 22% saying that they could borrow one, the figures suggest that other sub-Saharan countries could follow Kenya's lead and move away from cash if providers launch services and this, says Gallop, "is a positive sign for millions of African households poised to benefit from affordable money transfers and other financial services in the future".

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