Over the past few years, the financial services sector has shown a significant rise in Africa. From a relatively underinvested and underexplored sector, today, it’s one of the continent’s biggest prospects.
This has probably been made possible due to the fact that the financial sector development has been a topic of interest among African policymakers. However, despite strong growth in the banking sector, a large population of Africa still don’t use formal financial services.
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According to reports by the World Bank, over 2.5 billion adults are unbanked worldwide with South Asia being the most unbanked region followed closely by Africa. There are over 350 million people in Africa that lack a bank account, which is about 17% of the world’s population.
Many of those who lack a bank account cited different reasons for lacking one, some of which include:
• Geographical inaccessibility • Poor infrastructure • Lack of trust in the banking sector • Religious reasons • Banking in Africa is expensive • Insufficient financial education
• Finally, the most common reason was that they don’t have enough money, and as such don’t see the point of owning one.
How Has Inaccessibility to Financial Services Affected the African Population and the Region’s Economy at Large?
Financial inclusion has been shown to be critical in the reduction of poverty and achievement of long-term economic growth in the continent. By broadening the access to financial services, people are able to manage their day-to-day finances as well as plan for the future (e.g. spending tuition fees for online studies).
Take for instance remittances to Africa. Approximately 3% of the continent’s population work and live abroad, and a majority of them send money back home to support their families and friends. Remittance has proven to be a major source of income for most African households, which benefits the economy as well. However, the cost of sending money to Africa is higher compared to other continents. This is mostly due to the lack of financial services, among other reasons. This brings us to the next point of discussion.
How to Reach the Unbanked Population
A lot of the unbanked population still relies on informal financial services and use of cash for their day-to-day financial activities, which is unsafe, inconvenient, and typically expensive. And, rather than forcing people to open bank accounts, financial sectors have to explore alternative operating models to reach this population.
Thanks to technology and the rise of mobile phones, there has been the emergence of alternative financial services providers: the Mobile Money Revolution. Mobile money has proved to offer huge opportunities to build on Africa’s financial inclusion progress. Not only does it benefit individuals but other financial services providers and the economy as well.
In a short period of time, mobile technology has become part of everyday life for many. Of the unbanked population, 155 million have mobile phones, while 200 million have access to a mobile phone either through a friend or family members.
How Does Mobile Money Work?
Mobile money allows the unbanked and the underbanked population to use their phones as a bank account; where they can deposit, withdraw, and transfer funds. They can also use the system to pay for utility bills and goods, and even do mobile banking.
These services are accessible from an electronic account known as “mobile wallet”, which is linked to the SIM card in the mobile phone. The account is protected by a PIN (personal identification number), with accounts credited or debited immediately after the transaction takes place.
Of the three major mobile money services (mobile banking, mobile payments and mobile transfers), users prefer using mobile transfers and mobile payments as these services don’t require them to have a bank account. Mobile payment services, also known as m-commerce, allow customers to buy or sell goods and services remotely or physically using their mobile wallet.
The mobile transfer services (money transfer “person-to-person”), allows users to send and receive cash across the country and even across international borders. However, most of the mobile-to-mobile transfers are regionally based. Thankfully, there are several money transfer apps that can allow you to do transfers across international borders.
Money Transfer Apps
The ever-expanding capabilities of mobile devices together with the financial sector’s transition to digital have seen an increase in mobile apps. Money transfer apps have made it easier to send money overseas. They are secure, fast, and low cost, not to mention, you can easily do transfers on your phone. These apps are also convenient since they offer foreign currency transfers. With several money transfer apps competing in the market, some of the best ones include:
Azimo
Azimo has apps available in Apple’s App Store and Google Play Store. The app keeps you fully updated on the current status of your transaction from the moment you hit send to the point of collection. It guarantees fast and easy transactions with reasonable fees. With over 200,000 pick-up points serving over 195 countries worldwide, Azimo offers a strong customer service. Plus, it requires no phone number for support.
WorldRemit
WorldRemit offers super-secure, fast, and easy to use transfer services to over 140 countries. Best of all, transfers can be received as cash pick-up, a bank deposit, an airtime top-up or as mobile credit. Upon completion of transfers, both the sender and the recipient receive an email notification or an SMS showing that the money has arrived safely.
A money transfer app may just be the greatest way to send money anywhere, just make sure you get the best deal possible by comparing the exchange rates and transfer fees. Also ensure the app is secure, easy to use, and comes with helpful features such as live currency exchange rates. Using a website like apps-for-money-transfer.com can help you make the right choice when determining the right app for your online money transfer.
Author bio: Jens Ischebeck is an Africa focused website publisher. The two main sites are apps-for-money-transfer.com (international money transfer apps for inward and outward remittances) and fast-bachelor-degree.com (accelerated bachelor degree by inline studying).