New data from UK-based Juniper Research shows that both microfinance providers, and mobile carriers, are driving a surge in financial inclusion for the unbanked populace in developing nations, through the provision of sophisticated mobile finance services.

Juniper’s new research, dubbed "Mobile Financial Services: Developing Markets 2015-2020", estimates that microfinance user numbers in developing regions, including Africa & India, will triple from 94 million in 2015 to 283 million by 2020.

Mass Adoption

The research found that mobile savings accounts such as Safaricom’s M-Shwari and Tigo Tanzania had already gained mass adoption in their respective markets, with the network operators benefitting both from reduced churn and from the opportunity to upsell additional content such as microinsurance and loans.

A Transformative Effect

Indeed, the research points out that the introduction of such services can have a transformative effect on both individual livelihoods and on communities. It cited the example of ACRE Africa which offers agricultural micro-insurance, protecting farmers’ livelihoods in regions prone to natural disaster.

Other providers offer insurance as an incentive to purchase airtime top-up, such as Pakistan’s Easypaisa which offers free life insurance to anyone who opens a prepaid mobile account with an average monthly balance of $20.

As research author Lauren Foye explained, “For the first time, the unbanked can afford protection against natural disasters, such as crop failure and illness, essentially offering a means by which to recoup their losses. Before the introduction of microinsurance, a farmer suffering crop failure may well have lost his livelihood.”

Other key findings

Consumer expenditure on mobile loan services will increase by 600%, reaching $2.4 billion in 2020.

Telcos are able to leverage individuals’ mobile payment patterns and mobile social network histories to facilitate credit scoring for loans
with the closure of M-PESA linked insurance service ‘Linda Jamii’ announced, it is clear that some segments continue to face significant challenges.

Ghana situation

Meanwhile, the four mobile money platforms, MTN Mobile Money, Airtel Money, Tigo Cash and recently Vodafone Cash boast of about seven million customers and counting.

The Ghana central bank has recently released two new guidelines aimed at empowering the mobile money operations of the various telcos to drive financial inclusion in the country.

On the basis of the guidelines, the mobile money platforms are expected to register as separate financial institutions and provide consumer banking services. Indeed, some of them have already started promising interest on moneys kept on the mobile money platform over a given period.

The central bank recently reported that money floating in the mobile money space has been growing exponentially over the last three years.

The Central Bank governor, Henry Wampah, recently noted that money siting with banks from the mobile money space is over GHC200million. But that money, according to industry players may have moved around about ten to twenty times so money floating on that platform is estimated at about GHC3billion.

In terms of the use, several people use it to buy air time, pay school fees, bills, and stipends to beneficiaries of pro-poor programs among others.

The new guidelines will allow people to save money in the mobile money platform and earn interest.