The share of adults in Sub-Saharan African saving regularly has not changed since 2017. This is according to the Global Findex survey by the World Bank. However, there has been a significant shift in the manner in which African Adults are saving their money. For the first time, most savers in the region used formal methods rather than ‘semi-formal’ saving methods. The shift is from Mattress “savings accounts” is attributed to growth in Mobile money savings products.
A state of the industry report from the GSMA shows that the share of Kenya adults saving remains at 70% since 2017. However, the share who saved formally increased in that time by 18 percentage points to 45% in 2021.
As the number of Kenyans saving formally increases, the number of those saving exclusively via bank accounts is decreasing. Notably, 35% of Kenyan savers exclusively used mobile money accounts to save their money. In 2017, the Kenyans who saved using a bank or similar financial institution only, was 27%. In 2021, the number dropped to 8%. This is because they had found other digital saving alternatives.
Mobile Money Savings Products
Mobile money service providers have taken a keen note of this trend and responded to the market. The number of mobile money savings services grew from 39% in 2022 to 44% in 2023. As a result, savings is now the second most popular adjacent financial service, with more Mobile Money Platforms (MMPs) offering savings products compared to 2022.
The savings product allows customers to save money on a daily or weekly basis. For example, with M-Shwari locked savings, clients choose how many weeks they would like to contribute before accessing funds. Across the globe, the cumulative number of unique customers that transferred funds to mobile money savings accounts increased by 38% between September 2022 and June 2023.
Growth in mobile money savings accounts is attributed to ease of access in making deposits and withdrawals. Secondly, mobile money platforms provide quick and easy credit without the bureaucracy associated with banks. This has encouraged more people to save on mobile money platforms in order to increase their credit limits. A recent report says that over half of all Kenyans (55 out of 100) have gotten loans from digital lending apps. There’s also been a big rise in mobile wallets, with the Central Bank of Kenya reporting over 70 million in use by mid-2022. Credit is the number one adjacent financial service offered by mobile money platforms.
Further, innovative models aimed at digitising semi-formal savings groups such as Chamas in Kenya or VICOBA burial societies in Tanzania are emerging. Mobile Money Platforms are also launching products such as M-PESA Chama in Kenya.
Now group members can save into a kitty in a digitized and more transparent manner. This is because the mobile money saving product provides a transaction trail and requires group approval before withdrawals. In addition, all members receive a notification when any transaction takes place.
Vodacom Group digital savings products have encouraged female entrepreneurs to shift from cash and have adopted mobile money in the process. In Kenya, more female business owners adopt digital payment channels (PayBill, Till Number etc.) than their male counterparts in Urban Areas.
