Old mobile phone in Addis Ababa

Mobilising the Digital Payments Revolution

A Call to Fintechs to share their solutions

Jem Shaw, Monday, February 24, 2020

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Today, 5.1 billion people own a mobile phone. Compared to a world population of a little over 7 billion, that suggests that roughly two-thirds of people are part of the app revolution. GSMA, the organisation that represents the interests of mobile operators, predicts that that figure will grow to 71% by 2025. Of those, nearly 80% will be smartphones. Time for smiles and handshakes all round, as we congratulate ourselves on the financial inclusivity of a new world of digital transactions. But there are victims hidden in these encouraging numbers. And, given that we're talking about billions of people, even a small percentage of exclusion can equate to exclusion and suffering on a massive scale.

Today's article pivots on an invitation to companies, particularly fintechs, to tell us of their initiatives to bring opportunity to everyone, not just the fortunate majority.

Let's translate the statistics above into actual numbers. To do that, we have to make some assumptions that will inevitably be inaccurate, but the results will give a reasonable feel for the problems facing real people, not bars on a graph. Right now, just under 2 billion people - roughly the population of China and the US added together, have no access to a mobile phone. That might be less of a problem if those without a phone could borrow that of, say, a family member. But a look at the chart below shows that low mobile phone numbers tend to cluster in fairly predictable locations. Nine of the twelve countries in the list are in Africa. North Korea's presence in the list is more a question of politics than disadvantage, so has been ignored in our extrapolations. The others are almost exclusively what we now brand as emerging economies.

Countries with lowest rates of mobile phone subscriptions
Country Mobile users Pop. Excluded
Eritrea 6% 3.6m 3.4m
North Korea 11% 25.8m Ignored
Kiribati 17% 0.1m 0.08m
Cuba 22% 11.3m 8.8m
South Sudan 25% 11.2m 8.4m
Central African Republic 25% 4.8m 3.6m
Marshall Islands 29% 0.06m 0.04m
Burundi 30% 11.9m 8.3m
Ethiopia 32% 115.0m 78.2m
Djibouti 32% 1.0m 0.68m
Malawi 33% 19.1m 12.8m
Tuvalu 38% 0.1m 0.06m
Total 124.36m

Any interpretation of these numbers needs to be bracketed with strong cautions. Some of the countries concerned have sketchy census processes, and our extrapolated values for excluded population take no account of age or family grouping. In reality, several of those counted as excluded would in fact have mobile access via a family member's phone. But the chart gives an idea of the numbers of people who could be left behind in our digitally driven world. Let's say we're out by a factor of ten. That still leaves a group the size of the total population of Malawi isolated from the advantages of digital payments.

Not All Phones are Smartphones

But these figures ignore an important fact: in 2020, according to Statista, 3.5 billion people use smartphones. That's less than 50% of the world's population. The average price of a smartphone is roughly $350, with budget models around $100. A typical weekly income in, for example, Ethiopia is roughly $52. So the pattern of the scatter chart below is hardly surprising news. Comparing the penetration of smartphones in Ethiopia with the 32% phone usage in the table above, we can surmise that roughly one third of phone users in the country can use apps.

smartphone usage comparison graph
Correlation of smartphone usage to per-capita income
(based on data assembled by GFluence)

Challenge our assumptions, by all means. We freely admit that the statistical methods we've used here are open to all sorts of corrections and counter-arguments. But take them as a rule of thumb and it's crystal clear that the app-based economy is anything but inclusive. As we move ever more towards universally digital currency exchange, it's vital that we recognise that minorities can include very large numbers of people, and their exclusion from global prosperity can be easily missed in the glow of hopeful statistics.

Call to Action

If you're a fintech, a payment app provider, or other business associated with payments, we'd very much like to hear about how you're dealing with improving financial inclusion for disadvantaged regions. Those most applicable will be featured on our solutions page and may be promoted to organisations in the developing world.



Hasina Ndam

Friday, February 21, 2020

You raise intresting points to which I would like to respond in person. My organization is involved in a program to enable mobile technologies for non smart phones. Please contact me to discuss

Reply from Jem Shaw

Saturday, February 22, 2020

Thank you Hasina, I've sent you a reply to the e-mail address you supplied. I'm looking forward to talking further and learning more about your plans.

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