Mobile-based FinTech is closing the Economic Gap in Africa

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Mobile-based FinTech is closing the Economic Gap in Africa

african woman talking on cell phone

Mobile Phones are Disrupting the Cycle of Poverty in African Nations

In a 2016 TEDx Talk, Sivan Ya’ari, the founder of ‘Innovation: Africa’ shares a fascinating story about her efforts to bring electricity to villages in Africa. She was initially disturbed by the absence of essential medicines in Africa’s remote villages. She was told that this was due to the lack of refrigerators. There was no electricity, so refrigeration was impossible. And yet, despite the lack of electricity, Ya’ari discovered that villagers carried mobile phones.

So, if there is no electricity, how were they re-charging their phones? Astonishingly, villagers would walk for hours to one village where there was electricity and a charging hub, each paying 10 cents to charge their phone. Capitalizing on this, Ya’ari realized that the village in which she was working could also set up a hub with solar-powered electricity. This would provide a steady stream of income, with which they could buy lightbulbs and other necessary items for the villagers.

Ya’ari’s story is one of the simplest examples of how mobile phones are disrupting poverty in Africa. This, and stories like it, are encouraging signs for the economic future of Africans.

Mobile-based Financial Services Are Closing the Income Gap in Africa

Despite lack of basic services across most of Africa, mobile phones have been around for decades. The African continent proved fertile ground for mobile communications companies to expand their market share. The growing mobile technology market in Africa opened unprecedented doors to mobile financial services, and this has created lanes for economic empowerment for Africa’s impoverished population.

Cashless Payments and Access to Financing

With mobile financial services, Africans can make cashless payments for even the simplest things, such as taking a cab or public bus. Through their mobile phone, they can access small loans from banks or microfinance institutions to start small businesses.
M-PESA, for instance, is a mobile-based money transfer service. Africans can access savings and microloan services. Taking it a step further, M-Akiba, another mobile-based fintech platform, allows people to make investments. This means that a rural citizen, with a skill and dream to become an entrepreneur can now, through his or her mobile phone, access a small loan. When the business becomes profitable he or she can invest in the future. Rural Africans – a historically cashless society – are no longer marginalized from economic opportunity.

Empowering Africa’s Poor through Access to Fintech

In January 2018, Arise, an African investment company, formed a partnership with Above and Beyond Tech, an international technology company headquartered in America, and with the Dutch Development Bank, FMO, to launch a mobile-based fintech initiative. FinForward is designed to digitize all banking services, making it more accessible to underserved communities.

A “” article published in January 30, 2018, says that between the years 2008 and 2014, 2% of Kenyan citizens moved out of poverty thanks to access to fintech on their mobile devices. Access to mobile phones has led to a tremendous growth in technology hubs, with 300 hubs and incubators in Africa.

The hi-tech community likes to talk about disruptive technologies, and it’s safe to say that mobile-based financial services have totally disrupted the cycle of poverty in rural Africa, thereby paving the way to a brighter future.