Mobile finance can increase national GDP

Safaricom-mobile-money-1.jpg

Safaricom mobile money 1

from PHYLLIS BIRORI in Kigali, Rwanda
Rwanda Bureau
KIGALI, (CAJ News) – THE deployment and adoption of mobile financial services is associated with a positive impact on gross domestic product (GDP) growth in developing markets.

It helps businesses to reduce cost, access credit to invest and to connect with consumers that were previously excluded from financial services.

This is according to new research from Vodafone Group, Vodacom Group, Safaricom, and the United Nations Development Programme (UNDP), whose results were disclosed at the Mobile World Congress-Africa in Rwanda.

The econometric modelling research, which examined 49 countries in Africa, Asia, and Latin America, found that countries with successful mobile money services had an annual GDP per capita growth rate up to 1 percentage point higher than countries where mobile money platforms had not been successful or not introduced.

Based on previous World Bank research on the relationship between economic growth and reductions in the number of people living in poverty, this GDP per capita growth implies that countries with successful mobile money adoption could reduce poverty by around 2,6 percent.

Sitoyo Lopokoiyit, Chief Executive Officer of M-Pesa Africa and Chief Financial Services Officer at Safaricom, said mobile financial services platforms are vital drivers of financial inclusion in society.

It can improve individual life chances and enable enterprises to launch and expand, bringing wealth and jobs into developing economies.

“There remains though barriers both to accessing platforms – including digital literacy and smartphone accessibility – and to developing them – with an un-level regulatory playing field for non-traditional financial services providers in many countries,” Lopokoiyit said.

Ulrika Modeer, UN Assistant Secretary-General and Director of the Bureau of External Relations and Advocacy at UNDP, said financial inclusion is a pre-condition and a key enabler for meeting many of the UN’s Sustainable Development Goals.

“Eliminating financial exclusion in Africa, and across the globe, must be a priority if we are to deliver inclusive, sustainable prosperity for all on a healthy planet,” Modeer said.

– CAJ News

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