In the era of mobile money, financial inclusion has grown considerably on the African continent. This development goes hand in hand with the explosion of local transaction costs, which have become less sustainable. Mobile money does not only suffer from high fees. There are several other disadvantages that cause some voices to offer Bitcoin (BTC) as a viable alternative. In this paper, we will take a close look at what it really is.
Send money in an envelope: the time is over
Banking Africa has long been an impossible mission. It was not that long ago that financial transactions on the continent were carried over from one hand to the other. The cash exchanges were made peer to peer. And even in these conditions, there was no lack of constraints that blocked trade. This is notably the lack of road infrastructure viable.
In a country like the DRC, for example, a trip of 300 kilometers can last two days. Making Kisangani-Kinshasa (1200km) by river is a matter of several weeks. This without taking into account the transport costs which are no joke either.
In some regions, it was therefore impossible to send a few cents to his family living 100km away. Impossible either to make a transfer to his children who continue their studies in the neighboring town. In either case, it was imperative to make the trip yourself or take advantage of the service of a generous traveler.
What really put an end to this phenomenon was the advent of Mobile banking. He has the merit ofhave reduced lengthy money transaction procedures to a simple manipulation of a phone.
Today, a very simple solution is therefore available to everyone: stay at home, press a few buttons on your mobile. The money gets there in seconds. So all is well, who can not appreciate that we are out of averaging?
Telecoms, these key players
Yes Western Union or Moneygram have lived moments of glory, today mobile money is in fashion. The industry now takes the biggest share of the pie in local transactions.
Let’s take an example Orange, Airtel and MTN. These companies are at the heart of everything concerning mobile telephony in Sub-Saharan Africa. They have controlling internet access and making an important breakthrough in the banking world. These stars have allowed anyone with a phone number to turn it into a bank account.
There was no lack of success. Today the continent has more one in four adults with a mobile money account.
But … how much does a money transfer cost?
Each telephone company applies its own rate depending on the country. The large differences in transfer costs are felt mainly because of‘Regulations for the sector that are not at all similar in all countries.
At Cameroon, MTN applies between 1 and 3% of fees on money transfers and 3% on withdrawals. In Ivory Coast, this is the operator Orange who takes the lion’s share. It offers fees varying between 5 and 1.4% depending on the amount concerned, while a round Congo discovered that the same operator charges even higher fees. Even if account deposits remain free, withdrawal fees, they vary between 0.85 and 16% ; the same on the side of its competitor Airtel which applies charges of up to 25%, a very different rate from that offered by the same operator in neighboring Rwanda.
What is wrong with the fees?
It is true that mobile money has the merit of playing a significant role in thes money transfers. The sector is far from immune from the ills plaguing the monetary system as a whole. Even though its closed its eyes to the high transaction costs, there is still a lot to be said.
Censorship, transaction limits, currency devaluation, security breaches sometimes leading to loss of user funds and so many other reasons are important limits for its adoption.
This creates a breach in this system which is one of the subjects which only enjoys positive discourse both in the media and within the political powers. Bitcoin can therefore use this breach to develop on the continent and constitute real competition for mobile money.
What Bitcoin offers
Where mobile money offers a system controlled by companies that unilaterally set the rules of the game, bitcoin offers a fully decentralized universal system offering each individual the ability to have real control over their assets, the ability to send money at a very low cost and absolute transparency, a rare commodity on the continent.
The fact that bitcoin has not yet been widely adopted can be a hindrance as the money transferred is often intended to be spent. It is at this point that mobile money seems to be the best solution on the market. On the other hand, if we take into account all of its limitations (listed above), everything suggests that the oldest cryptocurrency could legitimately find a large audience.
A Zimbabwean will not say that bitcoin is volatile than the local dollar. An activist concerned about the preservation of his privacy will certainly choose bitcoin to the detriment of mobile money. A merchant wanting to make a large payment will have nothing to do with mobile money, in particular because of the limit on the transaction limit, etc.
Both systems all have strengths and limitations. To make a choice, it all depends on where you live, who you are and what you do. For us, as long as Satoshi’s invention frees censorship, arbitrariness in setting fees, gives control back to the user… we will talk about it as an alternative to mobile money.
Hi, this is Glory. In 2014 I heard about bitcoin. The interest was not there until the end of the bubble of 2017. Since then, I have studied the subject with passion while sharing my little discoveries with the community.