Since MPesa’s rapid rise to prominence in Kenya opened up a new market for consumer and business payments, East Africa has emerged as Africa’s mobile money hotspot. Similar results were obtained in Tanzania, Rwanda, and Uganda. Ethiopia too is in the early stages of its mobile money revolution. However, some of the continent’s most promising mobile money markets are in West Africa, a region that came late to the revolution but is now defining it.

A late-comer no more

Kenya may have been the poster child for mobile money, and the payment method remains a strong and significant part of how Kenyans, residents, and visitors transact daily–but Kenya is no longer the only example of how mobile money can transform economies.

Between 2020 and 2021, the number of mobile money transactions in Ghana grew by 48.6% from 2.85 billion transactions in 2020 to 4.26 billion transactions in 2021. By contrast, the volume of mobile money transactions made in Kenya in 2022 modestly by around 5% to 2.8 billion from 2021.

The yearly gross domestic product of Ghana is currently almost equal to 70% of Kenya’s economic output, which helps to explain why this is significant. Nonetheless, 82% of Ghana’s economic production in 2021 came from mobile money transactions in the country. This is in good comparison to data for Kenya that have been reported as low as 68% by Global Voice Group, a Spanish data and compliance tech company, or as high as 87% by the Boston Consulting Group. The World Bank claims that Ghana has the world’s fastest-growing mobile money market, which is significant. Due to new government tax rules that may monitor mobile money wallets for tax purposes, Kenya may witness a fall in mobile money transactions.

The point is that while Kenya’s dominant mobile money operator, MPesa, still leads Africa’s mobile payment ecosystem in terms of transaction value, that lead is slipping. Smaller countries in West Africa are already the next growth frontier.

How West Africa is becoming a mobile money hub

Mobile money ecosystems are expanding to become reliable and important actors in the financial services industry not just in Ghana but in other West African nations as well. The GSM Association’s State of the Industry on Mobile Money Report 2023 states that whereas growth in East Africa was only 12% and 8%, respectively, West Africa had increases of 27% and 30% in registered accounts and 30-day active mobile money accounts.

In absolute numbers, East Africa still leads in transaction value and volume, but that lead is slipping and has been for two consecutive years, the GSMA reports. On the other hand, the number of active accounts in West Africa is growing faster every year compared to the number of registered accounts.

What is driving growth in this new thriving market?

Mobile money is growing in West Africa due to a number of factors some of which include:

  • Regulatory reforms that have opened up the mobile money market for previously closed players like telcos and fintechs.
  • The increasing adoption of mobile money and the attendant convenience of the payment method are creating a flywheel effect that recruits more active users.
  • The increased government support for digital payments in order to better support revenue and economic formalisation programs.
  • Within the region, mobile money adoption is also growing fast in the 8 countries that make up the West African Economic and Monetary Union (WAEMU also known by its French acronym UEMOA) as fintechs take advantage of the economic integration between the countries. For example, Senegal’s Wave became the first non-bank, non-telecom operator, that operates in multiple WAEMU markets to be granted an E-money (EME) license by the regional central bank for WAEMU countries, BCEAO. 

From one perspective, the most exciting thing about the growth of mobile money in West Africa is the gap that remains to be covered, even as West African citizens and residents begin to trust digital finance players as their primary transaction method.

While internet and cell phone adoption rates are still rising fast, financial inclusion rates remain low. In order to tap into the largest potential market in the area, P2P mobile payments, telcos, fintechs, and banks in the larger countries of the region, such as Nigeria, are starting to step up their efforts in this regard. In other words, demand for mobile digital payment methods will still be growing for some time to come.

This article was written by Moses Sule, Head of Growth (Africa), dLocal.

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