Mobile phones, internet and jobs in Africa (2)
My column this week is the second part of my recent paper for the NTU-SBF Centre for African Studies at Nanyang Business School, Singapore, where I am a research fellow. References are in the original article.
Digital IDS would be key
It is not certain that Africans, when availed of low-cost internet, would use it for productive economic activities, say, to earn income. According to a recent study, most Africans use the internet for online social activities. However, this is not unique to African countries. Most of the world’s poor use the internet for leisure. That is not as bad as it seems.
With about half a billion Africans without official identification, online social activity could become a credible source of information for personal identification, address, and credit scoring. This is not a pie-in-the-sky idea; visa applicants to the United States are now required to submit their social media account details. While opening bank accounts and lending money, banks could easily do the same for know- your- customer ( KYC) documentation.
In any case, African countries are beginning to establish digital identification systems. With digital IDS, Africans would be better positioned to participate in the estimated $300 billion continental digital economy by 2025.As is already the case in India, there is evidence of economic benefits in the aftermath of digital ID schemes. In Ghana, physical addresses have been digitalized. Kenyans began registering for digital identification numbers in April2019.
In Nigeria, all mobile phone subscribers undergo biometric registration and all bank account holders have a socalled “Bank Verification Number”. So, there is a positive trend towards some form of national digital identification system in a host of African countries. Progress is admittedly slow. There are ongoing multilateral efforts to help African countries pick up the pace in a sustainable way.
Africa is leading global mobile money adoption
79 percent of the growth in global e-commerce transactions in 2018 was via mobile money. As shown in Table 4, 66 percent of the $40.8 billion mobile money transactions in 2018 were in sub-saharan Africa. Africa’s lead in mobile money makes it well-placed for an e-commerce boom. There is a rising trend towards cashless transactions on the continent.
Banking via mobile phones (or mobile banking), is now ubiquitous and normalised. And with the unbanked able to use digital payment systems like mobile money, they are also increasingly financially included. In other words, both formal and supposedly informal economic agents in African countries are increasingly able to participate in the digital economy.
If the trend continues, as it seems likely, much of the informal economy would become formalised in due course. The ubiquity and increasing affordability of mobile phones make the potential of mobile money to formalise the over 300-million adult Africans currently financially excluded (without any accounts) great indeed.
Of the more than 866 million registered mobile money accounts in 90 countries around the world, Africans own 46 percent. 54 percent of the adult population in Ghana, Cote D’ivoire, Benin and Senegal use their mobile money accounts regularly. The same cannot be said of the three most populous African countries; Nigeria, Ethio