Mobile Money, a digital wallet and payment service that does not require a bank account, has the potential to lift a wide swath of people out of poverty. It provides financial digital connectivity in low-and middle-income countries – a critical determinant of a country’s growth and development – and is a key tool for solving socio-economic and environmental challenges. Mobile Money majorly contributes to the Sustainable Development Goals (SDGs), a group of global goals signed up to by 193 UN member countries, that are a blueprint for peace and prosperity for people and the planet. This blog will explain how.
Mobile Money helps households become more resilient to financial shocks and avoid or lift themselves out of poverty, linked to SDG 1 on ending poverty. In times of crisis, such as a natural disaster, Mobile Money allows the flow of remittances and payments to reach those most in need, in a fast, secure, and effective way. Think of an individual enduring a shock who can receive payment from a family member abroad, delivering life-saving financial support. In our report Mobile Money in Ethiopia it is clear that if Ethiopia experiences high adoption rates similar to Kenya, Ghana, and Uganda, 700,000 people are anticipated to be lifted out of poverty, contribute $5.3 billion to GDP, increase tax revenue by $300 million, and provide a safety net for almost 40% of households.
The service also helps smallholder farmers access financial services and increase food security as set out by SDG 2 on zero hunger. For instance, in 2020, the AgriTech programme awarded Vodacom Tanzania a grant to digitise cotton, dairy and maize value chains. By digitalising crop records, farmers transition from cash to digital payments and dispersed populations receive rapid financial relief during agricultural crises. Vodacom’s interest in agriculture is aligned with its objective to support Tanzania’s Vision 2025 development programme.
Since 2009, Mobile Money has supported the provision of convenient, safe and affordable financial services to migrants and their families to send and receive remittances, enabling efficient delivery of humanitarian assistance and helping persons with disabilities access financial services. This increases financial inclusion and alleviates inequalities that SDG 10 seeks to address.
Women make up 55% of the world’s unbanked population and Mobile Money provides traditionally unbanked populations, including women, with secure and convenient means to carry out financial transactions. Women are also disadvantaged when it comes to accessing financing for climate change. With this in mind, Mobile Money delivers critical loans and insurance to women during climate crises, at a fast and crucial pace. Ultimately, Mobile Money addresses two SDGs in this way, SDG 5 as women are disproportionately affected by the impacts of climate change, and SDG 13 as women can access climate finance.
To maximise its socio-economic impact, Mobile Money needs to sustainably reach people at the bottom of the economic pyramid. Conducive tax regimes can mean a wider impact on people’s livelihoods and greater ability for the 193 signatory countries to reach the SDGs. When thinking about consumer protection mechanisms, policymakers can picture the marginalised consumer as the beneficiary. Governments can get behind digitalisation, one of the best tools available, to speed up progress toward development goals. Mobile Money really is a key conduit to support the SDGs.