Crypto and Mobile Payments Enhance Financial Inclusion in Africa

Africa's Shift towards Digital Financial Platforms

As Africa moves towards a digital economy, cryptocurrencies and mobile payments are playing a critical role in promoting financial inclusion. Despite various challenges such as cost barriers to opening an account, high remittance fees, a lack of identifying documentation, limited access to physical bank branches, and an economy that still largely operates on cash, the continent is emerging as a global leader in mobile money transactions.

Today, Africa accounts for 70% of the world’s $1 trillion mobile money value and nearly half of registered mobile money accounts. The value of Africa’s mobile money transactions significantly increased to $701.4 billion in 2021 from $495 billion in 2020. This trend suggests that the future of African financial services is both digital and mobile.

Mobile Money and Crypto Adoption

Mobile money, an electronic payment technology that allows money transfers between mobile devices using a SIM card, has been pivotal in broadening access to financial services in areas where financial infrastructure is lacking. Moreover, research shows that by 2025, at least 70% of all online transactions will be made with alternative payment methods such as digital wallets, mobile money, and instant payments.

Despite the growing adoption of mobile money, broader financial services are still not reaching the majority of African citizens. This gap has led to a surge in the use of digital financial services, particularly crypto-enabled payments. Africa is one of the fastest-growing crypto markets in the world, with tech-savvy consumers across Ghana, Nigeria, and South Africa leading the way. Last year, the number of retail transfers of $1,000 actually increased in Sub-Saharan Africa, reflecting a growing trend of using digital currencies to solve issues related to financial inclusion and limited access to the banking system.

Challenges and Opportunities

While Africa leads the world in the number of mobile money accounts, the region is still plagued by low rates of interoperability. Users often have to move money in and out of various wallets to complete transactions. This issue hinders the growth of electronic payments and limits the potential benefits of financial innovation and inclusion.

However, there is a significant opportunity for Africa’s fintechs to leverage the success of mobile money to promote the adoption of crypto-enabled tools. These tools can make payments even more accessible, approachable, and affordable for everyday users. Building safeguards like Know Your Customer (KYC) and Anti-Money Laundering (AML) into mobile money transactions that utilize blockchain and crypto technology can grow safe, scalable adoption and address concerns around organized crime.

As the world’s workforce continues a remote or hybrid-first model, this opens up further possibilities for Africa to stimulate its economy with crypto-enabled payments. The African workforce now has the opportunity to go global, uplifting millions from poverty and enabling remote workers to be efficiently paid with crypto via digital wallets on their mobile devices.