Connecting Africa

Mobile as a technology platform

In Africa, many people lack access to electricity and running water but do own mobile phones. With more than 330 million unique subscribers, the mobile penetration rate in Africa is around 38 percent.

África subsahariana es la región donde más ha crecido la penetración móvil en los últimos cinco años

The number of new subscribers has grown at an annual rate of 18 percent in the last five years, while costs have gone down, reflecting greater competitiveness and affordability. However, the penetration rate in sub-Saharan Africa remains the lowest in the world, according to GSMA, the association of mobile operators worldwide. Technology's impact on the region, however, is undisputed.

The mobile industry is having a transformative effect on economic and social development in Africa

Michael Nique, innovation manager, GSMA

Like in the rest of the world, the mobile phone emerged in Africa as a way to communicate via phone calls and text messages. But over time, the mobile phone became a technology platform that allowed the development of other services, thanks to cellular technology.

This is how Mobile Money, the greatest authentically African technological revolution, came into existence. Within less than a decade, this service has transformed the way people think about finance in Kenya, where it was created, and it continues to expand into other countries in Africa and elsewhere.

Mobile money is a payment option which operates through mobile devices

Instead of paying with cash, cheques or credit cards, customers can use their mobile phones to pay for any type of service. Mobile payments, especially in east Africa, are becoming the de facto form of payment, and growing numbers of people have come to depend on it.

This system has turned out to be particularly useful in countries where the majority of the population work in cities and send money back home to their families living in rural areas. Mobile payment is saving them time and money.

100 million people in the world use mobile money: 40 million of them are in Africa and 26 million are in Kenya. That's how M-Pesa came about

Johan de Lange,  former executive vice president at Clickatell

M-Pesa, the fusion of the words "mobile" and "pesa", the Swahili word for money, is the biggest success story of the African technology industry. This innovation has provided financial services to millions of unbanked citizens, boosted economic growth and moved the equivalent of 25 percent of Kenya's GDP.

Created in 2007 by Vodafone for Safaricom, the largest mobile operator in Kenya, M-Pesa allows users to deposit money into an account stored in their phones. Once the money is deposited in cash at one of 40,000 agents, the customer can make transfers by SMS to other users or vendors.

"M-Pesa has changed the life of people who can now save money more easily."

Mery Wangiru, M-Pesa agent, Thika, Kenya

The M-Pesa service lets you send money, pay for services or do your daily shopping with a simple text message.

"It is very simple to send money with mobile money."

Chaska Wambachy, Agogo, Ghana

80 percent of Kenya's adult population uses a mobile money service.

Why did it start in Kenya? Because of the high cost of money transfers, the Safaricom monopoly and experimentation. "When M-Pesa was launched, Kenya's market was unregulated, meaning that the product was shaped by the same market. That is how it got to be so successful," says Johan de Lange, president of Mobile Transactional Services.

Unlike east Africa, the process in west Africa was much more formal because the central banks took control before the services emerged. This led to weaker development of mobile money. "For the time being, the east is spearheading innovation in Africa. The regulationist approach in the west will slowly change, however," says de Lange.

De Lange  believes that banks will increasingly enter into partnerships with telecom companies to make the process more effective.

A good example of this development is the mobile money service provided by MTN telecom in Ghana, in collaboration with a number of banks. The service operates through authorised dealers who provide services on behalf of partner banks.

Discover how Ghana's MTN mobile money service works

On top of technology like mobile money and SMS, one can find new innovations such as M2M, a system that lets you transfer data between machines. The combination of all three has resulted in the development of the Pay-as-you-go option which involves making pre-payments by topping up credit. In this way, it is now possible to pay for any type of service from the most remote areas with just a mobile phone, thanks to mobile money.

In the past two years, a large number of companies have been integrating M2M technology into their domestic solar energy systems and water pumps. Companies like M-KOPA and Mobisol owe their existence to mobile money payment systems. Their solutions enable people who lack access to electrical grids to pay for solar energy in small daily instalments.

This technological revolution is now also helping people working in agriculture.

M-Agriculture collects data such as market prices, farming techniques or weather conditions and sends them to farmers by text or voice messages. The start-up aims to combat the lack of information available to farmers when negotiating prices with intermediaries, a situation which causes huge losses to rural communities.

Farmerline is another startup from Kumasi, Ghana, which provides services to the country's farmers through mobile phones.

Farmerline offers services to fish farmers on the outskirts of Kumasi, Ghana's second-largest city. Over the last year and a half, the startup provided daily information on how much feed to give fish.

"This has allowed for more fishing and larger catches increasing their income," says Alloysius Attah, CEO of Farmerline. Although M-Agriculture is an emerging concept, the experience of companies like Farmerline or Esoko suggests that these applications can transform rural areas in the long term.

Discover how Farmerline works

Despite the benefits of technological innovation, introducing a new product or service into rural areas with high rates of illiteracy is very difficult. In the rural communities of Ghana, 60 percent of people have mobiles, but only 10 percent use text. Voice is still the most widely used form of communication. New services therefore have to be very easy to use.

Implementing technology is very difficult. You have to be a sociologist more than a technologist

Mark Davies, CEO of ESOKO

Africa remains the poorest region in the world and the ICT industry is still very young, with little experience and competence. "Ghana has a very small IT community. It is no man's land," says Mark Davies, director of Esoko. However, the emergence of new technologies is multiplying the number of business opportunities.

Africa is becoming an attractive continent and in recent years a lot of investors are coming to develop new ventures.

Enterprises seek to create new services, but on one condition: they have to be developed for mobile, the only device most Africans have access to. Despite progress in the industry in recent years, the greatest impact is yet to come. Two-thirds of the population still do not have mobiles.

Authors Angelo Attanasio / Jerónimo Giorgi

Development Àlex Poderoso

Music M-Kopa video 'African Mbira with Percussion' (Akashic Records)

Project supported by European Journalism Centre and the Innovation in Development Reporting Grant Programme.

Journalism GrantsEuropean Journalism Centre