Financial Sector Development in Africa: Opportunities ... - World Bank

Mobile Financial Services in Africa: The Next Generation 57
Even if mobile Internet usage is increasing rapidly, does it have any
relevance for poor or less well-educated consumers? Here too, early evidence
suggests that the take-up of mobile Internet may surprise, just as
the adoption of mobile voice services stunned forecasters in the previous
decade. For example, Gitau, Marsden, and Donner (2009) report on a
focus group in Cape Town, South Africa, of unemployed women of limited
educational background. These women had never previously used
the Internet but, with some initial guidance, rapidly adapted to doing so
using only a mobile phone. They found services like employment listings
especially helpful, but they also actively used social networking platforms
to connect with friends.
The massive growth of these social networks is itself a global phenomenon.
The largest, Facebook, reported some 500 million members across
the world in 2010. 11 Other networks tend to have regional followings—
such as TenCent (China), Orkut (Brazil), and Friendster (Asia). Mxit
is an African-based, mobile-focused example that now claims some
20 million registered users worldwide, the bulk of whom are young
South Africans (see box 2.2). Mxit users exchange instant messages with
one another using general packet radio service (GPRS) at a fraction of the
cost of SMSs. Like the other platforms, Mxit has expanded its service
offering to allow users who do not have bank accounts or credit cards to
buy electronic money (called Mxit Moola) with which they can buy
digital goods and entertainment, as box 2.2 explains more fully.
Implications for Mobile Financial Services
Mobile financial services will not be exempt from the disruptive effect of
mobile Internet. In developed countries, the arrival of feature-laden
smartphones such as Apple’s iPhone or the Research in Motion (RIM)
Blackberry has ignited demand for a range of new payment applications,
since smartphones have the capability of offering user-friendly secure
interfaces for banking or payments independent of the mobile operator.
In 2010, smartphones made up 14–17 percent of worldwide mobile
phone sales, according to research groups Nielsen and Gartner, and this
proportion is rising very fast; Morgan Stanley forecasts that sales of
smartphones will exceed sales of PCs by 2012. However, the high price
of smartphones (typically $400–$600 without a subsidy from the MNO)
makes them inaccessible to all but the wealthy in developing countries.
However, it is not necessary that a phone be “smart” to access the
Internet: “enhanced phones” with browsing and Java capabilities will do.
As Pickens, Porteous, and Rotman (2009) show, sales of enhanced phones