Assessing the potential of Mobile Payments in Africa: Approaches and Evidence from Uganda

This paper provides an evaluative framework that assesses the potential for mobile device-based payments (m-payments) in Africa. The framework is developed according to an analysis of the financial services environment and the drivers and constraints for change within a specific country context ??? Uganda. The paper draws upon secondary data from published surveys, as well as field research conducted by the author.The framework distinguishes between formal, informal and un-served market segments and the findings suggest that the potential for m-payments is differentiated according to existing levels of financial sector participation. Clients of formal or semi-formal sector institutions are likely to be the early beneficiaries of new m-payment services delivered by existing providers. Informal sector participants may provide greater potential for extending access given their greater financial resources and literacy, but will require more tailored solutions. Relatively little is known about the financial practices and behaviours, and the extent of mobile use, amongst the financially un-served. Reaching the unbanked majority with m-payment services will involve greater ingenuity and innovation on behalf of service providers.Overall, the analysis suggests limits to market-based solutions for mobile and financial service delivery, highlighting constraints to change that are conditioned by non-market factors related to financial and technical literacy and the need for new organisational solutions making use of appropriate community-based intermediaries.