ICT Facilitated Financial Service Deliveries in Africa

The banking sector in Sub-Saharan Africa (SSA) has been described as underdeveloped, risk averse and highly concentrated in urban areas. This has kept large segments of the African economies non-monetized as the rural populations have largely remained ‘under/unbanked’. The situation seems to be changing with the introduction of information and communication technology (ICT) in to the financial sectors of increasing number of SSA countries. A wide range of financial services (including transfers and payments) is now provided over mobile networks. There are expectations that such other banking-type services as deposits, borrowing, and insurance can also be provided in some countries within a couple of years.

This chapter discusses the key theoretical arguments underlying the ICT innovation within SSA’s financial sector and the implications that the innovation carries for economic growth and poverty alleviation in the region. It also presents case of M-PESA, a Kenyan SMS-enabled money transfer system that has grown rapidly since its launch in 2007, and discusses the lessons to be learnt from its evolution and growth.