How Technology Impacts Financial Literacy in Africa

23 March 2020

One thing can change everything.

We live in an era of rapid change and constant ripple effects which are a result of a new way of thinking and doing. We live in an era of opportunity, where almost anything we think of can probably be done. If we can’t get it done in the physical world, technology enables us to make it happen in the digital world. What was unthinkable yesterday becomes the norm tomorrow, and just as we begin to get comfortable, another brilliant mind brings an idea to life and reminds us that technology (and the world) is exponential.

Since the partnership launched, almost 6 million people have registered to make use of these financial products.

Who would have thought that the invention of mobile phones would lead to something other than mere convenience? That an icon or a string of numbers on a phone could impact an entire population? When mobile money was invented, it created more than convenience for people who couldn’t get to a bank. It created financial inclusion for millions of unbanked people.

To get the best benefits out of financial inclusion, financial literacy is essential. The Financial Educators Council defines financial literacy as “possessing the skills and knowledge on financial matters to confidently take effective action that best fulfils an individual’s personal, family and global community goals.” A report from the Punjabi University Patiala in India entitled Financial Literacy for Developing Countries in Africa details how being financially literate can contribute to improving socio-economic wellbeing, reduce poverty and promote sustainable growth. Simply put, financial literacy enables individuals to make good decisions about money in their personal and professional lives. For an individual who previously had no access to financial products and services, making good financial decisions can be incredibly challenging. However, because we live in a digital (and exponential) world, learning and understanding new concepts happens at a faster pace, often in a ‘hands-on’ environment. People in Africa who previously had limited or no access to financial products are becoming financially literate in a very hands-on way, thanks to the rise of mobile money and the world of financial services it offers.

Aside from being able to safely store and save money, mobile money provides access to life cover and hospital insurance. MTN and MTN Mobile Money partnered with Momentum Metropolitan Holdings to form aYo, a company that provides hospital and life cover to subscribers through their phones. Since the partnership launched, almost 6 million people have registered to make use of these financial products. This means almost 6 million registered customers are actively planning and thinking about their financial future in the event of unforeseen circumstances – an essential factor in responsible financial planning.

The ability to save funds and sign up for insurance products is only the beginning of what’s possible in the world of Mobile Money. Considering how quickly an idea can become a reality in the digital world, we might soon see the day when Mobile Money users have access to all the same products and opportunities offered to those who use traditional financial services. When that day comes, people in Africa will be ready, armed with a comprehensive understanding of mobile financial services.