The GSM Association launched a study in July 2013 as part of its Mobile Money for the Unbanked (MMU) programme. According to the study, DRC is one of the most promising mobile money markets in Sub-Saharan Africa due to an enabling regulatory environment and the potential to scale in a country with around 70 million people. However, poor infrastructure, low literacy levels, dispersed populations, and a mobile phone penetration of only 17.5% made it challenging up to now to understand the use cases for mobile money in the DRC.
The present GSMA study conducted research on a) user demand, b) formal and informal competitive market landscape for remittances and financial services. Based on MNO demand, the study focused on four key regions: Kinshasa, Bas-Congo, Katanga, and North Kivu.
While reading the document a few interesting data points and conclusions were given:
- The DRC is in the early stages of mobile money adoption. Eighty-three percent had already heard of mobile money services via TV advertisement, but 42% did not know how to access such as service.
- DRC is still predominantly cash-oriented with minimum access to financial services (only 4% of adults have a bank account with a formal financial institution, and 1% used a formal account to save money in the past year, 8% of adults save through an informal, community-based savings method, and 305 had obtained a loan from a family member in the past year);
- While domestic remittances are common among DRC households, “sending money” is unlikely to tempt local households to try mobile money since there are strong local alternatives, e.g., local and international remittance companies offering their service at affordable fees. Fifty-three percent of households send/receive remittances of which 93% go to people´s home province. Main reasons for sending money funds were a) Regular family support (36%), b) School fees (20%), c) Emergency help (9%), d) Business activities (11%), and e) Health expenses (7%). Compared to transfer companies (e.g., Amis Fideles, STC, Soficom, Solidaire Transfert, and Agence de Freres), banks require minimum transfer sizes, high cost, need for an account with the specific bank, etc.
- Probably greater opportunities and necessity for mobile money as a means of alternative forms of payment, e.g. focus on bill and salary payments. However, during my time with Procredit in the DRC, the IT infrastructure of these utility companies would have only permitted a manual service and no complete integration;
- Small businesses have specific payment needs for both salary and supplier payments. They currently meet these needs with cash;
- Due to the banking crises in the 1980s and 1990s, many people considered banks unstable and not trustworthy.
- Technical problems mentioned by 78% of households and 64% of small business owners across all network operators, are a major concern especially for mobile money users.
So what does this mean for mobile money in the DRC?
First, in the short run, MNOs face an uphill battle getting consumers to switch to a new and unfamiliar channel. However, while the remittance market might be complicated, there is a growing P2P market in the DRC which means that as mobile money moves to scale, there is a long-term commercial opportunity.
Second, respondents showed a lot of trust (48% consider them as “very trustworthy”) towards MNOs which bodes well for mobile money. However, qualitative research showed that mobile money is perceived as a financial service and therefore more associated with financial institutions than with mobile operators. MNOs will have to position themselves carefully vis-a-vis financial institutions.
Thirdly, partnership with utility companies and large enterprises for salary payments will prove valuable in the long-run.
Forthly, MNOs will have to strongly invest in client education to build trust among customers.
Lastly, MNOs have to provide a reliable GSM network for people to regain confidence in the transmission of their transaction. Network coverage currently reaches around 0-60% of the population. In addition, the set up of agent networks will help to serve all the bill payers and salaried population to easy access their funds. MNOs have been implementing agent networks, but due to low transaction volume, there are only a few.