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Mobile phones help advance Africa into financial mobility
Africa's technological advancement is enjoying major upliftment with the introduction and deployment of financial mobility across a footprint spanning strategic points on the continent.
The technology, designed by South African banking and mobile commerce software company Fundamo and commercially deployed by companies in South Africa, Botswana, Zimbabwe, Zambia and the DRC, enables secure financial transactions to be effected via mobile phones, initiating Africa's shift into the world of realtime financial mobility.
Africa is primarily a cash-based economy. Cash is problematic, not only for financial traceability in banking institutions, but for the average person on the street. Mobile transactions have a host of advantages over cash: immediacy - transfers can be made in realtime; security - cash can be stolen or lost; convenience - geographic locality is irrelevant; efficiency - no more queuing to pay bills; cost - transactions are conducted via SMS; and mobility - transactions can be conducted on the street, where people meet. Banks benefit from cash retention and an enhanced set of products to offer their customers. Mobile operators benefit from increased network usage and customer loyalty, particularly relevant in a context where most of their customers are prepaid customers who change networks relatively easily.
"Cash-based economies suffer from the inherent inefficiencies of cash and cheques as payment instruments," says Hannes van Rensburg, CEO of Fundamo. "There are many benefits to be gained from migrating to electronic payment instruments - mobile being an excellent example. Studies have shown that efficiencies associated with the introduction of electronic payment instruments can lead to cost, time and risk reductions, as well as to further economic growth. Mobile technology enables real time transacting between bank accounts, maximising interest-earning opportunity."
Mobile transacting is being used for person-to-person payments anywhere in the world, 24x7. It is used to pay for services as well as in the retail environment, to buy groceries, pay for meals, even fill up with fuel. Transaction data is encrypted to ensure security. Payments are effected immediately and only incur the additional cost of a single SMS.
"The person paying does not even have to be present," Van Rensburg points out. "If you've run out of funds you can simply phone and ask someone else to pay via their mobile phone on your behalf."
The demand for mobile banking services in Africa is substantial. In 2002 the number of cellphones in South Africa exceeded those of fixed line users, while Nigeria alone has 20 to 30 cellphone users for every fixed line user.
"The penetration of GSM into Africa is happening fast, with major growth potential in the intersection of electronic transactions, mobile phones and the mobile networks. Merging GSM coverage and penetration with the need for electronic transactions will not only deliver on market demand but have a positive commercial effect on the continent's wider economy by making financial transactions more efficient," says Van Rensburg.
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