Africa: How Mobile Money is Revolutionizing Savings Across Africa

The rapid rise of mobile money across Africa in recent years has transformed the savings landscape, marking a significant shift toward financial inclusion. This growth is driven by increased mobile phone penetration and internet access, allowing millions of people to conveniently access financial services and make formal savings a part of everyday life.

Mobile money has democratized access to savings, empowering people from diverse socioeconomic backgrounds to join formal financial systems. This shift has been especially beneficial for marginalized communities, such as women, rural residents, and low-income earners, who have historically been excluded from traditional banking services.

The convenience offered by mobile money eliminates the need for physical bank visits, allowing users to save and manage funds with just a few taps. Users can deposit, withdraw, and even automate savings, making it easier to build financial security. Mobile money also provides flexibility by offering diverse savings products—from basic accounts and fixed deposits to mobile-based investment platforms—allowing users to manage their funds according to individual financial goals.

Ways Mobile Money is Influencing Africa’s Savings Culture:

1. Fueling Entrepreneurship and Investment: Savings accumulated through mobile money can serve as capital for entrepreneurial endeavors. With a foundation of savings, individuals can fund small businesses, education, and other income-generating activities, contributing to long-term financial stability.
2. Creating Financial Safety Nets: Mobile money offers a much-needed financial cushion during economic uncertainties or emergencies. By saving on mobile money platforms, individuals build a buffer for unexpected expenses, health emergencies, or income disruptions.
3. Encouraging Microsavings: Mobile money enables individuals to save even small amounts frequently—known as microsavings. This practice promotes a habit of saving, helping people with limited income to gradually build financial security.

The impact of mobile money on savings varies across African countries. For example, in Kenya, the percentage of adults saving money was nearly 70% in both 2017 and 2021. However, during this period, formal savings through accounts rose by 18 percentage points to 45%. Notably, 35% of Kenyan savers—almost a quarter of all adults—rely exclusively on mobile money for their savings.

The convenience of mobile money has particularly benefitted women. According to a 2023 GSMA report, in Senegal, only 6% of women saved with traditional banks in 2021, while four times more women chose mobile money for savings. This trend is consistent in countries like Kenya, Uganda, and Zambia, where the percentage of women using mobile money for savings is more than double that of those using traditional banks.

Mobile money provides an accessible savings solution for women who face challenges in accessing banks, such as transportation costs, family responsibilities, or restrictive social norms. Earlier studies found that even women with bank accounts often relied on informal saving methods. Mobile money’s appeal lies in enabling frequent, low-value deposits through a model that is cost-effective and easy to use, breaking down the barriers of distance, cost, and accessibility.

While not all mobile money accounts have formal savings features, the landscape is evolving. Innovations aimed at digitizing semi-formal savings are emerging, including regulations that promote interoperability between mobile money and interest-bearing accounts, along with enhanced consumer protections to safeguard mobile savers from fraud.

Overall, mobile money is transforming how Africans save, making financial services more accessible, affordable, and inclusive. As mobile money adoption grows, it holds the potential to drive widespread economic empowerment and prosperity across the continent.