Despite mobile financial services being relatively new, they have become a key driver of financial inclusion in Zambia, particularly among women and the underserved populations.
In the recent past, we have seen an increasing number of mobile money users growing at a very fast pace, demonstrating that it is a platform that can transform the entire economy. Thus, it has been adopted across commerce, trade, industry, health care, agriculture, and other sectors of the economy.
It is worth noting that mobile money is a technology that enables financial transactions through mobile phones without a bank account thereby driving financial inclusion.
This gives more people a chance to use financial products and services through their mobile money wallet without having a bank account as long as one has a mobile phone device.
In addition, mobile financial services have proved popular especially as they help prevent the spread of the Covid-19 pandemic. People can transfer money or make payments whenever they are, in a simple, fast, convenient and affordable way.
It has improved the efficiency of transactions and initiated some changes in traditional banking in the country. For example, the number of active Mobile Network Operators (MNOs) based mobile money users increased by 77 per cent in 2020.
From 2018 to 2019, mobile payments increased by 123 per cent in values; and by 114 per cent in the subsequent year.
According to Bank of Zambia (BoZ) Deputy Governor – Operations Francis Chipimo, Zambia has continued to make significant progress in the digital transformation agenda, especially in the area of digital financial services.
Dr Chipimo indicates that active MNO users rose by 77 per cent from 4,852,040 as at December 31, 2019 to 8,607,461 as at December 31, 2020.
According to the Finscope Survey of 2020, financial inclusion increased by 10.1 percentage points to 69.4 per cent from 59.3 per cent in 2015 was mainly attributable to mobile money.
It is worth noting that these digital payments options have been instrumental in facilitating trade and commerce amidst the Covid-19 pandemic.
To make mobile money payment easier, Dr Chipimo says during the year 2020, the National Financial Switch (NFS) project accomplished its final major milestone, the mobile payments module. As at end of first quarter of 2021, a total of 15 participants were live on the mobile payment module.
“This module provides great opportunities for everyone as it provides diverse use cases and enables customers to conduct instant payment across networks and service providers without handling cash.
“This is particularly important, given that the Covid-19 pandemic period has continued to ravage economies across the globe,” Dr Chipimo says. With this in place, mobile money payment will become easier as people will be able to transact across networks, thereby reducing the flow of cash.
In the period under review, more than K105 billion was transacted through mobile payment and this is expected to increase this year as most consumers adopt digital payment platforms. These mobile payments are from both commercial banks and mobile money accounts.
This year so far, BoZ Acting Director of Payment Systems, Mirriam Kamuhuza says more than K33 billion had been transacted through mobile payments during the first quarter of 2021.
Ms Kamuhuza says the Central Bank anticipates that more funds will be transacted through mobile payments this year following an increased uptake of digital payments by consumers, partly triggered by the Covid-19 pandemic.
“We can only anticipate that there will be more growth because the Central Bank is taking measures together with other regulators such as Zambia Information Communications and Technology Authority (ZICTA).
“The Central Bank has been talking to ordinary people about migrating to digital platforms as it greatly reduces persons to persons contact and reduces the spread of Covid-19. Our anticipation is that the use of these channels will go up,” she says. More consumers adopted the use of digital payments which saw over K105 billion being transacted through these channels from about K50 billion recorded in 2019.
“In terms of active mobile money accounts, when you compare what we had in 2019 and what we had at the end of 2020, there was about 77 per cent increase in active mobile money active accounts. “By the end of 2020, I can tell you that we had moved about K95 billion in mobile money, when we add the banks, it is about over K100 billion in terms of value, when you look at the volumes we had over K750 million transactions going through the system,” Ms Kamuhuza says.
While the number of mobile phone subscribers has been on the increase, the number of phone subscribers registered for mobile has increased at a higher rate.
This means that a majority of people who own mobile phones have now also registered for mobile money. The percentage of active mobile wallets to registered mobile wallets has also increased and stood at 45 per cent as at end 2020.
According to the Bank of Zambia, an Active Mobile wallet is one which has recorded a customer initiated transaction in the last 90 days.
Between 2019 and 2020, the number of active mobile wallets had increased by 48 per cent to 8.6 million wallets While, the benefits of mobile money payment systems are clear, observers remain divided over whether mobile money systems are truly fulfilling their growth potential.
Despite the availability of mobile money booths along the line of railway, expansion and management of agent network in rural areas is a challenge due to setup costs and liquidity management.
Furthermore, some remote areas may need quality network coverage. Other infrastructure related challenges include low mobile phone penetration and lack of electricity to charge phones remain a barrier to adoption of digital financial services.
Within the urban area, there is a common problem faced by some mobile money agents on the issues of lack of float (liquidity).
Other challenges include the lack of Customer centric products that address the people’s day to day needs. This applies to the different segments of society such as the youth and the women.
Mobile financial services are truly driving the financial inclusion agenda in Zambia.