Vodacom may plan to shut down its M-Pesa mobile money unit June after attracting only 76 000 subscribers but in Zimbabwe new research suggests that the uptake of the mobile money is so great it threatens the viability of traditional banks.
In 2015, the majority of transactions were conducted not through the banks, but on mobile money platforms.
The simple service was introduced to assist those living in the city to transfer small amounts of cash to their unbanked families in the rural areas.
But since then the mobile money phenomenon has exploded. It’s now the dominate way Zimbabweans transact whether they are paying bills, buying groceries and fuel and even paying wages.
The mobile money services might be faltering elsewhere, but in Zimbabwe the uptake has been huge. The number of people subscribed to the service has risen to 7.5 million in 2016, that’s three times the number of people with bank accounts.
There are 35 000 agents around the country in far flung areas where banks are yet to be established.
Analysts believe the reason why mobile money has succeeded in Zimbabwe, whilst it has failed in South Africa is because the vast majority of the Zimbabweans are unbanked, and bank transaction charges are higher.
Financial Analyst Andrew Matangaidze says: “In terms of transactional volumes there has been an upward trend in mobile transactions whereby in the past it used to be very minimal whiles right now in terms of volumes it close to 88 % in terms of the movement of volumes.”
“We see it going forward, the volumes may increase but in terms of transactional values it will remain minimal as compared to traditional banks.”
In 2015 57 billion dollars changed hands in Zimbabwe, only 7.5 % was through mobile money. As financial technology improves global research projects the banks globally face a challenge.
Mobile money continues its dominance, Zimbabweans face cash shortages have brought bank winding queues. As mobile money
continues to grow, its wings might only be clipped by the cash shortages as people decide to hold onto their cash.