Rwanda is increasingly adopting mobile financial services at a faster pace, a development which makes it competitive in the other economies in the region.

In recent years, Kenya and Tanzania have been applauded as mobile money success stories in East Africa.

However, a report released by the Consultative Group to Assist the Poor (CGAP) — a global partnership of 34 organisations that seek to advance financial inclusion — shows new technology can be effective in other markets such as Rwanda and Ghana.

According to CGAP, while 23 per cent of all adults have a mobile money account, 17 per cent of adults in Rwanda have active mobile money accounts, 61 per cent of active mobile money account holders are located in rural areas while 72 per cent live on less than $2.50 (Rwf1,900) a day.

Mobile money has been proved to be convenient as it allows monetary transactions to citizens wherever they may be in the country, especially in areas without banks.

More companies are introducing mobile payment options in partnership with telecommunication firms for services such as payment of water bills, tax, fuel at petrol stations and school fees.

Claudia McKay, senior financial sector specialist at CGAP, was quoted as saying: “There is a ripe market for products that make it easier, faster and cheaper for people to conduct financial transactions.

Strong business case

“Now, it’s a matter of designing products that fit into the everyday lives of people, especially the poor, and which have a strong business case for providers.”

According to the central bank’s annual report for 2015, the number of mobile payment agents continues to increase and more than doubled in the past year. They more than doubled to 36,000 as at June this year from 14,000 at the same time in 2014.

The CGAP survey also shows that, in Rwanda, 25 per cent of active mobile money users pay bills through their accounts but, although 71 per cent of adults pay for insurance, only 0.1 per cent of them do so via mobile money.

Jean Jacque Mutabaruka, an expert on technology solutions in the financial sector at Convergium.com, says this is a good thing as mobile technology is increasing financial inclusion. He however added that charges associated to mobile money transfer and other related transactions hinders financial payment and inclusions.

The survey emphasised digitising cash payments such as insurance premiums, savings, or wages as an opportunity for mobile money to expand in Rwanda and Ghana.

The survey findings also show that mobile financial services are proving to be critical to connect people in rural areas or those living on less than $2.50 (Rwf1,900) a day with formal financial services.

The study says “mobile money is proving to be to some adults’ first inroad into financial inclusion.”

Source: The East African