Nicholas Kamazi has an interesting perspective in his article, 5 Reasons Mobile Money Is Going To Die By 2020, which I fundamentally disagree with. While he caters for challenges with Mobile Money (MM), he does not take into account who uses MM and why, which are the reasons for the pervasive nature. Rebutting each reason for the death of MM:
- Death of Feature phones:
- Battery life: smartphones are no where near the battery life usage of feature phones, and in areas where there is little availability of electricity to charge the phones, this becomes a deal breaker
- Cost: I do not see $35 dollar smartphones becoming that popular
- Rugged: Feature phones can take alot of abuse, falls, drops, plus general wear and tear which current age smartphones cannot match
- Digital Currency: Africa in general and Uganda in particular, are cash economies. MM just allows people to move money from one place to another very quickly.
- Unnecessary Charges:
- The cost of sending MM is usually less than transportation and time for moving to acutally deliver the money without the risk.
- Most transactions are between UGX 50,000 to UGX 150,000 (US$20 to US$60) usually under urgent situations
- Urgency of transfer – most transactions happen with a need for urgency for example school fees, social functions, emergencies of different nature. Which can happen at any time of day or night, until there is an option which is that flexible MM is here to stay
- Capital Investment:
- MM is a defensive option for telecoms as their core business is getting eroded, and will evolve in order to remain relevant.
- I do not see any startup having the size, and capabilities to compete with the telecoms in this market, Uganda in particular and Africa in general.
- Even in Asia the agents are the key, however managing them is not an easy process so the incumbents will remain in play for the next 5-10 years.
- Business environment shift: the telecoms are here to stay, and MM will evolve along with the business environment.
Mobile Money is here to stay as it is:
- Pervasive with 20,000+ agents and counting
- With the telecoms opening up to 3rd parties for utility payments, diaspora remittances, merchant transactions
- Rural-urban social dynamics which form the bulk of MM remittances within a country
- Infrastructure challenges such as roads, railways which also provide a conducive environment for MM as an option for money transfer.