The GSMA recently published a report on the impact of the mobile industry on the Sustainable Development Goals (SDGs). This report is a first-of-its-kind and it looks across a number of areas such as mobile connectivity, the internet of things and mobile money to establish a benchmark through which the industry will be able to assess its contribution to the SDGs over the next few years.
Mobile money is one of the most exciting innovations operating at scale. With more than 400 million registered user accounts, mobile money has done more to extend the reach of financial services in the last decade than traditional “bricks and mortar” banking has in the last century. As an industry, we understand that we have a critical role to play to contribute to the achievement of the SDGs. Specifically when it comes to mobile money, we are committed to continue to develop new ground-breaking innovative products to developing world consumers who need it most.
Today, mobile money already contributes to 13 of the UN Sustainable Development Goals:
SDG 1 – No Poverty: There are many ways in which mobile money contributes to SDG 1. In particular, mobile money facilitates access to financial services, many of which contribute to build the resilience of the poor by reducing their vulnerability to economic, social and environmental shocks and disasters. In fact, research in Kenya shows that M-PESA users were able to fully absorb large negative income shocks (such as job loss, livestock death, harvest or business failure, or poor health) without any reduction in household income whereas statistically comparable non-users saw consumption fall on average 7 percent.
SDG 2 – Zero Hunger: Mobile financial services can help small agriculture producers to increase the productivity of crops by allowing them to purchase equipment, agricultural inputs, or upgrade to more productive practices, which can be difficult in remote locations without access to financial services through traditional channels. MNOs operating in countries where the agriculture sector is dominated by a few large value chains, such as cocoa, are looking at how to provide more efficient payment mechanisms for farmers. For example in Sierra Leone, Airtel partners with the Ministry of Agriculture to provide mobile money to farmers in the district of Kenema.
SDG 3 – Good Health and Wellbeing: Lack of funds can be a barrier to access critical health services, especially in countries with under-developed health systems. Mobile financial services can lower financial barriers by increasing access to funds at crucial times, through either increasing formal savings, or enabling transfers from remote friends and family when funds are needed for urgent care. A growing number of operators are also offering mobile health insurance to customers.
SDG 4 – Quality Education: In several markets, mobile money providers are working with primary and secondary schools, as well as universities (either directly or through the Ministry of Education), to digitise the payments of school registration fees, school fees and exam fees. This year, 99.3% of Côte d’Ivoire’s 1.7 million secondary school students paid their annual school registration fee via mobile money. This initiative has resulted in driving cost efficiencies, increased operational efficiency, and transparency for all beneficiaries.
SDG 5 – Gender Equality: Access to financial services drives greater economic empowerment through increased control over finances, lower risk of confiscation of money from a spouse, and an increased ability to start and expand businesses via a source of credit. Mobile money can contribute to increase women empowerment by offering them access to financial services in a safe and secured way, while respecting their privacy. These factors are particularly important as research shows that women feel empowered and independent if they can save and spend their money how they like, without undue demands. In addition, in some developing and emerging countries where women tend to be restricted in travelling long distances compared to men, mobile money can help address this issue by allowing them to initiate transactions and manage their financial accounts remotely.
SDG 6 – Clean water and sanitation & SDG 7 – Affordable and clean energy: The reach of mobile connectivity is greater than the reach of basic utility services like electricity or improved water and sanitation services, creating a new technological pathway to improve access to utility services for underserved communities. By providing an affordable and convenient means of payment for those with irregular incomes, the pay-as-you-go model expands the addressable market for energy and sanitation services significantly to reach part of the 40 per cent of people in Sub-Saharan Africa who live on less than one dollar per day. Mobile money can enable the development of pay-as-you-go models and other innovative financing schemes by supporting remote and secure collections.
SDG 8 – Decent Work and Economic Growth: Mobile money is a catalyst for local business and social enterprise, which is particularly important in developing markets, where formal SMEs contribute up to 45% of employment and 33% of GDP. Mobile financial services can help MSMEs address a number of the financial challenges they typically face, including overall book keeping capabilities, cash flow and liquidity management. For example, demand-side research in Naivasha, Kenya shows that mobile money has made a significant contribution to the SME sector since the majority of the traders relied on it as opposed to the formal banking sector for their day to day transactions. Surveyed business owners also confirmed that those services positively the contributed to their business growth. Opening a mobile money account is the first time many use a formal financial services, and as such represents a key step for them to join the formal economy.
SDG 9 – Industry, Innovation and Infrastructure: Access to mobile money and micro-finance can help SMEs to formalise their operations and access the credit required to expand. In least developed countries, one of the main barriers to the growth of small businesses has been a lack of access to finance, which subsequently results in the inability to productively mobilise resources. Mobile financial services can play a critical role in boosting access to credit services in developing countries. For example, in the Kopo Kopo Grow model in Kenya, any business accepting Lipa na M-PESA or credit card payments is eligible to apply for an unsecured cash advance.
SDG 10 – Reduce Inequalities: In remote communities, collecting remittances from family members working in major cities can be prohibitive in terms of both cost and time. On average the cost per transaction is typically 7.4%. Mobile money can help remove these barriers, by allowing customers to send and receive remittances using their mobile phones and existing data and research suggest that it is cheaper to send remittances using mobile money compared to other traditional remittance channels. As such, mobile money services appear as a critical tool to achieve SDG 10.c target around the reduction of remittance prices. For migrants and their families back home, using mobile money for remittances has other key advantages such as the convenience associated with sending or collecting money. Rather than spending a significant amount of the day traveling to an MTO or bank agent, migrants can make a transfer at any time and from any location. Equally, recipients can instantly use funds and do not necessarily have to cash-out immediately.
SDG 13 – Climate Action: Weather-indexed mobile insurance services can provide a safety net for farmers in case of climate issue or natural disaster. This has been the approach of Kilimo Salama, a provider of crop-insurance services via mobile to smallholder farmers in Kenya. Heavily dependent on quality weather data, Kilimo Salama has built 30 metrological stations of their own.
SDG 16 – Peace, Justice and Strong Institutions: In November 2014, the GSMA launched a Code of Conduct for Mobile Money Providers, which identifies principles aimed at promoting mobile money providers’ adoption of consistent risk mitigation practices in different areas including AML/CFT. As the industry grows, the Code of Conduct supports the development of a safe and responsible industry for digital financial services.
SDG 17 – Partnership for the Goals: The industry is a primary facilitator of mobile money services which helps formalise money flows and provides a channel for assessment and collection of taxes. The industry has a distinct advantage in that it reaches large populations, including those in hard-to-reach remote areas. Mobile money can be utilised by tax authorities to reach a wider population and reduce tax avoidance. For citizens, the medium offers a convenient, simple and effective way of paying taxes, allowing remote payments and reducing the administrative burden.