Authors: APET Secretariat

This post is the 4th in a blog series published in 2020 by the Secretariat on behalf of the AU High Level Panel on Emerging Technologies (APET) and the Calestous Juma Executive Dialogues (CJED).

Drastic measures have been taken by African countries towards protecting their citizens against the spread of the severe and acute respiratory syndrome known as the Coronavirus Disease (COVID-19). However, in doing so, unintended negative economic consequences related to the COVID-19 pandemic are being witnessed and felt by African countries across the continent. Public and private sectors of AU Member States are struggling to survive due to the impact of mass economic and social disruption brought about by the pandemic. This is because most African countries have imposed strict lockdown restrictions since the advent of the pandemic, resulting in shutting down the movement of goods and people. The exception to this rule are a few goods and services that are considered essential.  The pandemic, however, is far from over because a second or third wave of infections is mushrooming in numerous countries around the world. As the temperatures decline, probably because of the approaching winter season in the northern hemisphere, there have been increasing cases of COVID-19; forcing several European countries to embrace new restrictions including national lockdowns. Consequently, the negative ripple effect on Africa’s economy remains grave mainly due to trade partnerships.

When considering the low income per capita observed in some, if not most African countries, the reduced economic activity has exacerbated their economic challenges. This is because these African countries have limited strategic financial reserves to fall back on during such difficult times. Therefore, it becomes imperative to mitigate the worst-case scenario of economic struggles. This can be achieved by minimizing the impact of the pandemic on the financial sector but at the individual, national and regional levels. The minimization can be achieved by adopting digital mobile money transactions as they have proven to be an effective tool for moving money within African countries under restrictions. Incredibly, lockdowns and social distancing have accelerated the utilization of digital financial services in Africa. There is some evidence that the spread of COVID-19 can occur through the exchange of monetary notes surfaces. Interestingly, China, for example, banned the use of monetary notes in regions most affected by the pandemic. Because of these surface transmission threats, the entire world, including Africa, was persuaded to increase digital money transfer processes such as mobile money transfer and other financial services. This advent of financial digitization such as money transfer took advantage of the internet of things and artificial intelligence technologies.

Mobile financial services were already facilitating African institutions as a means of financial inclusion even before onset of the pandemic. Mobile money improved financial operations for numerous financial institutions in the banking and financial sectors. Thus, numerous customers of these institutions benefited tremendously. This trend was particularly observed in low-income households. Furthermore, this opened avenues of business for small financial institutions, typically with limited access to a customer base before the advent of mobile services such as money transfer.

Mobile money is increasingly being employed daily to conduct transactions for essential goods and services across the continent. This includes the payment of basic needs such as utilities, food, and clothes. Moreover, there has been a growing call to encourage companies to pay salaries to their workers through mobile money platforms. In addition, mobile financial services enabled financial products such as payment of loans, savings, and insurance are gaining momentum across the continent.

Most importantly, the ongoing COVID-19 pandemic has demonstrated that digital mobile financial services can also efficiently facilitate government’s service delivery when providing rapid and secure financial support to previously hard-to-reach people and businesses across the continent. For example, African governments such as Burkina Faso, Kenya, Malawi and Morocco are using the mobile money platforms to disburse these funds such as grants to their citizens. Thus, mobile money has been an innovative means in supporting the allocation of grants to secure survival for low-income families across the continent during the pandemic.

Innovatively harnessing mobile money platforms by financial entities and individuals have, therefore, significantly supported numerous African countries to combat challenges of social distancing and lockdowns resulting from the pandemic. These mobile financial services demonstrate the usefulness, resilience and convenience afforded to consumers in harnessing these innovative financial services, especially in rural areas of Africa. Thus, this further validates the view that Africa can realize the much-needed opportunities and solutions through science, technology and innovation generated products and services.

There is a call to decision-makers and policymakers as well as private sector to support equal access to digital infrastructure and energy for all African citizens. All Africans, either urban, semi-urban, and/or rural Africa must have access to reliable electricity, mobile and Internet coverage, digitization and digital literacy. Furthermore, reducing operational costs will support an inclusive recovery on the continent. This is because lower service costs for mobile financial technologies will enhance African countries in building more robust financial infrastructure.

In conclusion, as Africa moves forward towards a post-pandemic era, digital technologies such as mobile money platforms remain key to Africa’s socio-economic recovery plan. Thus, the continent cannot afford to be left behind when harnessing innovation and emerging technologies such as digital mobile financial services. The time is now for Africa to get ahead of the curve and secure a viable digital future of its citizens. Lastly, Africa must take advantage of its information and digital technologically savvy youth resource.

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