Could Mobile Phones Lead The Rise of The Cashless Economy in Africa?

The world is moving towards a global economy that deals less with paper and more digitalized data. Electronic payments have made substantial inroads among consumers in some developed countries, and many of these markets have been building the infrastructure for cashless transactions for a long time. However, even in the most cashless developed countries, such as the Netherlands, cash is still used in 40% of all consumer transactions.

Entrepreneur using smartphone

Trends in Africa

Africa is already leading the world in the use of mobile money, and its growth is accelerating with Internet penetration rising rapidly through mobile technology. In countries such as Kenya and Uganda, mobile-money accounts have become much more widespread than bank accounts. More than two-thirds of Kenyans use mobile-money services for bill payments, small loans, or to transfer money to family members or business partners in distant locations. This is also reflected in the rise of international top up services, which allow diaspora communities to support friends and family in their home countries.

The growth of Africa’s mobile cash services may be attributed to distrust of financial institutions, and in some cases the absence of traditional banks. The mobile revolution has therefore created an informal banking system with more efficiency and convenience than anything around the world. In many African cities, cash is disappearing and credit cards are unnecessary as daily shopping is digitalized now.

These cash-light economies are allowing the majority of people who would not otherwise have access to bank accounts to enjoy the benefits of the financial markets, such as access to credit, for example. Africa has also become the test ground for mobile money innovations because they allow customers to receive money from family and friends abroad with international top up services, obtain micro loans and buy insurance.

A success story

A mobile money success story is Kenya’s M-Pesa, a mobile phone based money transfer and microfinancing service. It was launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania.

M-Pesa allows users to deposit, withdraw, transfer money and pay for goods easily with a mobile phone. The service has since expanded to India, Afghanistan, South Africa, and Eastern Europe.

Variants of M-Pesa have also sprung up across Africa, as well as international top up services abroad.

The future of going cashless

There are intrinsic benefits of a cashless economy, mainly security, convenience, and time saving reasons. Companies and some governmental institutions are pushing the idea that reaching to get cash from your wallet is primitive and insecure, and advocate using a secure digital system that implements biometrics.

Managing cash is expensive for governments, such as the cost of printing, distribution, collecting and cleaning. Furthermore, tax evasion, the black market and money laundering typically use cash to avoid being tracked, whereas electronic systems can give a transparent view of how a country’s cash is moving.


There is still a long way to go for a fully cashless society, but with the rapid rise in smart phone connections and Internet penetration in Africa, it certainly looks as through the continent is heading towards a cashless future.


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