Assessing the Potential for Mobile Payments in Africa: Approaches and Evidence from Uganda

Richard Duncombe


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.

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Educator's guide

Synopsis questions

  1. What is the evidence from the current literature of uptake of m-payments services in Africa: give some examples  [Section B].
  2. Why is an understanding of the way in which markets operate essential for the analysis of m-payments potential?  [Section B].
  3. For the analysis of m-payments potential in Uganda, how does the article distinguish between: a) market-push and market-pull factors; and, b) drivers and constraints for change?  [Sections B & C & D].
  4. The paper outlines four key constraints to change (Fig 2).  Which might be: a) the most difficult; b) the least difficult to overcome? Explain why.  [Sections E & F].
  5. What are the key factor(s) that determine potential for m-payments?  [Section F].

Development questions

  1. What are the factors that limit the market as a mechanism for delivering m-payment services?
  2. What is your own viewpoint on the use of mobile phones for conducting payments in Africa? How might your viewpoint affect any research you do on the subject?
  3. In what ways might the growth of m-payment services in Africa benefit or  dis-benefit the poor?
  4. What topics/research questions do you think should be prioritised for m-payments research over the next five years?
  5. In what other ways could assessment of the potential for m-payments be approached?