Its 6AM and Clive Makumbe just arrived in Zimbabwe’s capital, Harare. He has traveled 300 kilometers, from his small farm in Masvingo, just to withdraw money. Banks in his town are dry as Zimbabwe suffers cash shortages. When we bump into each other, this is the sixth bank he has tried to get money from.
“I am preparing for the planting season because that’s how we survive. I ordered farming supplies but I haven’t been able to make payment for over a week because there is no money, that’s why I decided to take a bus and come here,” says Makumbe.
Once again, he is out of luck. This bank has money, but he can only withdraw $100 per day. He needs $2,200 to pay a supplier.
His only hope is mobile money.
“I am going to ask friends to lend me whatever they have, so that I can give my supplier at least half of the money I owe, so I can begin working. I know if they send it via EcoCash, I will be able to get it because EcoCash always has cash, unlike the banks.”
Like most mobile money services in Africa, EcoCash helps the unbanked save and move money through their phones.  According to Makumbe, in Zimbabwe, it’s better than a bank.
“Banks are unreliable. It’s so bad that we can’t send money out of the country even via internet banking. You have to do long applications to even be able to do that. Most of our suppliers are out of the country and paying them is a nightmare and some of them don’t want to do business with us anymore.”
With EcoCash, Zimbabweans can withdraw money from any MasterCard ATM in the world, they can make payments to one another through the mobile service and they often have cash available for withdrawal. Now they can also save some money on their phones.
“Zimbabwe has a poor savings culture. People don’t trust banks. A decade of hyperinflation left people’s savings in bank accounts wiped off to almost zero and now with bond notes coming, the same will happen.”
With EcoCash’s mobile wallet, which already has more than 1.5 million customers earning interest on all amounts starting from as small as $1, Makumbe says he and his friends always know they have money that they have access to when needed.
“We have a club of six where we each contribute $50 a month. We can track all transactions through our phones and when we need the money, at least there is a guarantee that you can get all of it without limits. We plan to buy groceries and share them at the end of the year,” says Makumbe.
“Group savings culture for specific purposes or asset investment is a common phenomenon in Zimbabwe, but the target segment is largely unrecognized and underappreciated. EcoCash Savings Club is intended to reward this diligent savings behavior, as well as become an enabler for access to other services, such as mobile credit. It also offers an opportunity to extend EcoCash mobile money agency businesses to groups of people that are creditworthy, but have been long marginalized,” says Natalie Jabangwe-Morris, Chief Executive of EcoCash.
Mobile money services thrive in most parts of the continent.
According to Sebastian Wolf, a Uganda-based economist for the International Growth Centre, the increase in mobile money transactions has increased the rate at which money is used as well as the money multiplier.
“This has made inflation in East Africa more difficult to predict and would argue for choosing inflation targeting over reserve-money targeting in East Africa. In terms of inflation, mobile money seems to bring gain without pain,” he says.
By making small commissions on millions and millions of transactions, mobile money is big business in Africa. Data also shows big opportunities for boosting financial inclusion among women and poor people, according to the Global Findex.
For MTN, a South African mobile service provider, the product’s revenue increased by 40.8% and performed well in Uganda, Ghana, Rwanda and Benin. Although successful in most parts of the continent, mobile money has failed in South Africa. MTN has pulled the plug on its local mobile money business. The problem is three quarters of South Africans have bank accounts. Vodacom also scrapped its M-Pesa service in South Africa after a disappointing take-up among users.
“Vodacom’s decision is based on the fact that the business sustainability of M-Pesa is predicated on achieving a critical mass of users. Based on our revised projections and high levels of financial inclusion in South Africa, there is little prospect of the M-Pesa product achieving this in its current format in the mid-term,” says Shameel Joosub, Vodacom CEO in a statement.
It was a smart decision.
Earlier this year, Vodacom only had 76,000 active users in South Africa compared to 9.7 million mobile money users across Tanzania, the Democratic Republic of Congo, Mozambique and Lesotho at the end of 2015. Revenue from M-Pesa in the financial year 2015/16 grew by 19% to R1.63 billion ($114 million), while Vodacom’s group revenue climbed 7.5%.
“We remain of the opinion that opportunities exist in the financial services environment and we will continue to explore these,” says Joosub.
And they are.
In other parts of the continent, Vodacom is trying to squeeze more revenue out of the financial service sector by encouraging users to sign up for M-Pawa, a mobile banking service. Already, it says, 15% of its money base is signed for M-Pawa. In Bangladesh, the fastest-growing financial services company is a mobile money provider called bKash. Less than four years after launching, it processes about two million transactions per day, with a total value of nearly $1 billion each month.
“By 2030, two billion people who don’t have a bank account today will be storing money and making payment with their phones. And by then, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance,” says Bill and Melinda Gates in their annual letter.
With mobile money, people like Makumbe may not need to go back into town ever again.

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