Africa’s payments digitization gathering pace


For more than a decade, mobile money has been the norm in a number of African countries where widespread access to mobile money accounts is a key driver of digitization.

M-Pesa has evolved to become Africa’s leading mobile money service with a footprint in Kenya, Tanzania, the Democratic Republic of Congo (DRC), Egypt, Ghana, Lesotho and Mozambique. The service has more than 430,000 active agents operating across all these countries creating not only employment but also streamlining transactions securely.

For instance, prior to mobile money, payments for services were in cash which imperilled those who handled large amounts due to exposure to insecurity but now, the situation is changing and is especially accelerated by the Covid-19 pandemic.

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Looking at agriculture, which remains the biggest employer in many Sub Saharan Africa (SSA) countries, the uptake has been phenomenal with Ghana and Kenya registering 37 per cent of agricultural payments being through mobile money account.

Uganda and Zambia have 28 per cent and 27 per cent respectively.

These four countries are among those with the highest uptake of mobile money in SSA where the share of mobile money accounts among adults is 73 per cent in Kenya, 51 per cent in Uganda, 39 per cent in Ghana, and 28 per cent in Zambia.

While agriculture is just a small part of the larger economic ecosystem, payments digitization cannot be underestimated when it comes to streamlining finances not only at the individual level but also at the national level.

West Africa has taken note and Senegal is shifting to digital payments to stimulate domestic production and consumption.

In Senegal, 8 out of 10 workers are paid in cash and most temporary workers are excluded from health insurance.

A survey revealed that 77 per cent of temporary workers would be willing to receive their wages digitally if this gave them access to health insurance. Combining digital payments with health insurance benefits offers an excellent opportunity for social inclusion, formalization, and financial innovation.

Data shows that if 50 per cent of temporary workers in Senegal received payments digitally, 45 billion CFA francs would be added to GDP per year (around US$80 million). Paying workers digitally, speeds up the financial inclusion for the population, boosts business competitiveness and increases financial system liquidity. To tap into this potential, the SME Development Agency (ADEPME) plans to bolster its SME support fund with $20 million USD (around 11 billion CFA francs) from the World Bank. This will be used to strengthen SME digitization initiatives and support digital payment projects for workers.

Senegalese President Macky Sall and H.M. Queen Máxima of the Netherlands have appealed to key players including leaders, the private sector and civil society to ensure that digital payments are at the centre of a sustainable and fair economic recovery.

Following the Covid-19 outbreak, Burkina Faso decreed the digitization of payments for workers in the administration in late 2020.

This was in line with the West African Economic and Monetary Union (WAEMU) and the Central Bank of West African States (BCEAO) decisions which were aimed at reducing the circulation of cash in the 8 countries. These actions have had tangible impacts which are beginning to change the lives of workers and companies.

Read: How Digitization benefits the Kenyan economy

In the move to reduce the spread of the virus, BCEAO directed that there be:

  1. Free nationwide transfers of electronic money between people for amounts less than or equal to 5,000 CFA francs, including transfers from bank accounts to electronic wallets, and vice versa;

  2. Free payment of water and electricity bills, via mobile telephony, for amounts less than or equal to CFAF 50,000;

  3. The elimination, by electronic money issuers, of commissions paid by merchants on merchant payments, backed by electronic money;

  4. The 50 per cent reduction, by banks, of commissions paid by merchants on merchant payments, backed by the card in the network of the Interbank Monetary Union of the West African Economic and Monetary Union (GIM-UEMOA);

  5. Raising the ceiling for recharging the electronic wallet from two (2) to three (3) million FCFA and the monthly accumulation of recharging from ten (10) to twelve (12) million FCFA. This measure is applicable only to regularly identified customers;

  6. A 50 per cent reduction in fees applied to customer bank transfers, processed through the UEMOA Interbank Automated Compensation System (SICA-UEMOA);

  7. Relaxation of the conditions for opening electronic money accounts. As such, issuers of electronic money are authorized to activate electronic wallets on the basis of mobile telephone data, subject to obtaining the customer’s agreement by any means and carrying out due diligence. Remote identification, within the limits of regulatory ceilings;

  8. A 50 per cent reduction in bank card withdrawal fees in the GIM-UEMOA regional network.

The West African region governments in support of digitisation note that digitizing payments can help in advancing universal healthcare coverage.

A POS. 8 out of 10 workers are paid in cash and most temporary workers are excluded from health insurance in Senegal. [Photo/UBA]
While receiving a salary is often linked to health care contributions, globally at least 61 per cent of workers operate in the informal sector without adequate coverage, according to the International Labour Organization (ILO).

Some countries also lack legal obligations for employers to contribute to any kind of coverage for their informal/self-employed workers.

To address this, the National Agency for Universal Health Coverage in Senegal has launched an ambitious digital payments platform in partnership with fintechs and private companies to link access to universal health coverage and digital payments – specifically targeting women.

Flagship national enterprises such as the agricultural giant SODAGRI or SMEs such as QUALIOCEAN and Kossam SDE are setting an example by providing temporary workers with universal health coverage. More than 200,000 workers will now have access to quality, government-subsidized health care.

While 81 per cent of national companies have fewer than 20 employees, on average hundreds or even thousands of temporary workers are employed in their supply chains. Employees are generally banked, but 93 per cent of employees on temporary contracts are paid in cash. The latter are systematically excluded from the formal health system.

For the successful transition into digital payments, three obstacles that have limited the growth of payment digitization in Africa have to be addressed. These include the size of the informal sector, sometimes up to 90 per cent of the economy; the historically low financial inclusion rate; and most importantly, 21 per cent of African workers receive a wage keeping them below the poverty line.

As an example, Senegal’s largest employer, Compagnie Sucrière Sénégalaise, has successfully digitized payment for around 8,000 workers via a partnership with local fintech.

The company does not use the banking system since it is not suited to some populations and which has helped avoid the constraints of managing large amounts of cash, and all the risks that distribution can involve. Using fintech has enabled the company to offer employees tools tailored to their financial situations.

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I have 10 years of experience in multimedia journalism and I use the skills I have gained over this time to meet and ensure goal-surpassing editorial performance. Africa is my business and development on the continent is my heartbeat. Do you have a development story that has to be told? Reach me at and we can showcase Africa together.

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