Somalia and Zimbabwe are both listed as Fragile, Conflict-affected, or Violent (FCV) nations by the World Bank. These two countries have another, surprising similarity: both have a high rate of mobile money adoption. Somalia has emerged as one of the most dynamic mobile-payment markets in Africa, with a growth rate of 11% between 2015 and 2016. Vital Wave’s recent work in the country builds on research by Altai Consulting that put the mobile money penetration rate in Somalia on par with Kenya, the longtime market leader in Africa. Altai’s research notes that over 65% of people who pay utility bills, transfer money, or buy groceries, durable goods, and livestock use mobile money to do so. And nearly half of salaried workers receive their paychecks via mobile money. In Zimbabwe, 8 out of 10 transactions – from buying milk or gas to settling a utility bill – are done via mobile phones, almost exclusively on the EcoCash network.
No one would argue that it’s beneficial to live in a FCV environment. An unstable government, war, crime, and corruption are generally bad for one’s health, and bad for business. But in Zimbabwe and Somalia, FCV conditions may have contributed to the widespread adoption of mobile money. In Somalia, the government was too weak to suppress the spread of mobile money through regulation, corruption, or state-mandated monopoly. In Zimbabwe, currency instability, high inflation, and an inaccessible formal banking sector drive mobile money adoption. It must be said, however, that other indicators of fragility, such as inconsistent electricity, create hurdles for reliable access to mobile money services, as demonstrated recently in Zimbabwe.
Development organizations and companies that shy away from FCV environments because of inherent risks may be overlooking opportunities to have a big impact. The high rate of mobile money use in Somalia enabled the creation of a government-owned bulk payments platform for civil servants and humanitarian relief recipients. Indeed, mobile payments were the best option, since only 16% of adults have a bank account. And a post by the Brookings Institution described a mobile money product for refugees in Rwanda that may soon expand to other countries. The article describes an “a-ha moment” as a banker from Kenya’s Equity Bank Group toured a refugee camp in Rwanda: “I can solve this problem. It is possible to serve… refugees profitably.” Importantly, mobile financial services also open the door to other mobile services in areas like health and education. The value of mobile services increases dramatically in areas where traditional service delivery channels are inconsistent or nonexistent. As such, the value and market for mobile services in FCV environments should not be underestimated.
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