NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, November 22, 2017

The recent 2017 Finscope Tanzania report shows that while mobile money use in Tanzania continues to grow, the percentage of financially excluded adults has risen in parallel — from 27 percent in 2013 to 28 percent in 2017.

After a decade of significant declines in financial exclusion, these new numbers raise the question of whether the strongest mobile money markets, such as those in East Africa, might be reaching a plateau in financial access.

Perhaps the best bellwether is Kenya, where over 70 percent of adults have mobile money accounts. With a majority of people connected to mobile money, Kenya’s financial services and development organizations have increasingly refocused their efforts away from financial access and toward improving account use.

This move is perhaps not without good reason. As more people gain access to mobile money, the question of how it can be used to improve the lives of the poor becomes more critical.

The development of products like digital investment, credit and savings are essential for moving low-income customers from basic transaction accounts to services that meet financial inclusion’s broader promise of lifting people out of poverty.

But what about those people who are still outside the bounds of financial services today?

Based on the 2016 FinAccess survey, 17 percent of Kenyan adults remain fully excluded — meaning they do not have a bank account, use another formal product like mobile money, or even use an informal mechanism like a savings collective.

Photo courtesy of Neil Palmer.