Investors Update: Africa’s Mobile Money Transaction Value Rises 22% to $836.5bn

Africa’s mobile money transaction value rises 22% to reach $836.5bn

Highlights

• Last year, mobile money transaction value in Africa rose 22% to $836.5 billion but its share of the global $1.26 trillion mobile money value dropped to 66.4%.
• That’s according to recent figures from GSMA, published in its 2023 State of the Industry Report, which shows that mobile money is growing faster in sub-Saharan Africa than in other regions except for the Middle East & North Africa.
• In 2021, Africa accounted for up to 70% of the world’s $1 trillion mobile money value after its transaction value jumped 39% from $495 billion in 2020 to $701.4 billion. 

Source: GSMA

Our Takeaway

In Africa, mobile-led digital payments continue to take root, but the uptick differs depending on the country.  Digital payment on the continent is already a +$400 billion industry, but there are still more opportunities for future growth. Africa has more than 500 million underbanked or unbanked, less than 50% of the continent’s adult population have made or received digital payments, and more than 40 million merchants do not accept digital payments.

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Mastercard targets Ethiopian MSMEs in new program with First Consult

Highlights

• The Mastercard Foundation and First Consult have announced the Micro, Small, and Medium Enterprise Recovery and Resilience (MESMER) Program aimed to support 72,200 informal, start-up, and formal enterprises in Ethiopia.
• The program is also expected to create 410,800 jobs within enterprises by building the resilience and growth prospects of MSMEs through access to finance, business development, and psychosocial support.
• More so, the program aims to bridge the relationship between MSMEs and financial institutions, creating information symmetry, credit history, better Know Your Customers (KYC) procedures, and improved credit eligibility.

Source: ABC

Our Takeaway

After agriculture, MSMEs are Ethiopia’s second-largest employment-generating sector and are the engines of economic growth and job creation. However, they face various challenges, such as difficulty in accessing finance. A 2021 study by First Consult estimates that 1.5 million MSMEs in Ethiopia face a financing gap of $6.1 billion, which would create 7.5 million jobs if addressed. Other critical constraints to the growth of MSMEs besides lack of access to finance include lack of collateral, weak entrepreneurial and business management skills, little to no capacity to absorb shocks, and a low level of financial service awareness.

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Ghana holds off on interest-rate hikes after clinching IMF deal

Highlights

• Ghana’s central bank paused its steepest phase of monetary tightening, after clinching a $3 billion lifeboat from the International Monetary Fund that’s likely to help rein in rampant inflation.  
• The monetary policy committee maintained the policy rate at 29.5%, Governor Ernest Addison told reporters Monday in the capital, Accra. 
• That’s after cumulative rate hikes of 16 percentage points since November 2021. Eight out of 10 economists in a Bloomberg survey correctly predicted the decision.

Source: Bloomberg

Our Takeaway

Last week, the International Monetary Fund approved Ghana’s request for a $3 billion bailout over three years to support the debt-ridden nation’s recovery, with the West African economy expected to receive an immediate disbursement of about $600 million. Ghana is faced with a debt overhaul after its already strained finances buckled under economic fallout from the pandemic and Russia’s invasion of Ukraine. The West African nation is negotiating its international debt rework under the Group of 20’s Common Framework platform and completed a domestic debt exchange this year.