The fast growth of mobile money in Africa and the increasing access to financial services has the potential to boost economic growth and create opportunities for banks to expand, according to credit rating agency Moody’s Investors Service.
In a new report titled “Mobile Phone Banking Supportive of Economic Growth and Banking Sector Prospects”, the agency says sub-Saharan Africa is experiencing the world’s fastest rise in new bank accounts, fuelled by the growth in mobile banking and this has the potential to boost economic growth and the region’s credit ratings. The agency says over time, increased access to formal financial services has the potential to boost economic growth by increasing productivity, facilitating investment in small and medium enterprises and reducing poverty – all important factors in creditworthiness.
At the end of 2014, about 12%of adults in the region had a mobile money account, compared to just 2% globally, according to World Bank figures. Mobile money use is high in Kenya and other African countries such as Uganda, Tanzania and Rwanda and are used for a wide range of transactions including payment for public utilities.
“Mobile phone banking technology is helping to include more and more people in Sub Saharan Africa into the formal financial sector and the economy more broadly. This has the potential to support sovereign credit quality in the region, whether the result of a more financially resilient population who are able to maintain a steady contribution to domestic demand and economic growth, or a healthier, more profitable banking system,” Rita Babihuga, a Moody’s Assistant Vice President was quoted as saying.