10 years after its launch in Chad, mobile money seems to be lagging behind in terms of adoption by the population.
According to ARCEPT's latest 2020 report on the sector, the number of service users is down compared to 2015 and 2016. Up until 2016, there were 3.5 million registered customers, dropping to 1.8 million in 2018. The figure rebounds from 1.8 million to 2.3 million between 2019 and early 2020. This growth is explained by the fact that the COVID19 health situation has forced people to register in order to limit physical contact with banknotes. However, this figure only represents 27% of mobile subscribers and 14% of the total population of Chad.
Indeed, there's a big difference between registered and active customers, and this gap hasn't really improved since the service was launched in 2012. This raises the question of how people will adopt the service.
According to the same ARCEPT report for 2020, of the 2.3 million customers registered up to the end of 2020, there are 1,768,800 active users. Active users are defined by GSMA as customers who make at least one transaction per month. This figure represents 7.6% of registered customers and 2% of mobile subscribers. Indeed this proportion has never exceeded 10% of registered customers since its launch in 2012.
In line with the above figures, we note that it is indeed true that the service is poorly used, 10 years after its launch, mainly due to its lack of adoption by the population. The reasons reported are explained by the lack of investment in distribution, which would have made the service very unattractive. To this end, we have identified two key factors for making the mobile money service more attractive to the Chadian population.
- Customer experience
The USSD technology on which the service is based is one of the most compatible technologies with virtually all cell phones available on the African markets, and therefore best suited to African contexts. However, in Chad in particular, this technology seems to be poorly mastered.
In fact, USSD technology is similar to that used to send SMS messages. To do this, it seems only fair to evaluate cell phone users' sms sending habits.
According to the same ARCEPT report on the sector, the number of sms users will be around 1.6 million by the end of 2020, representing around 18.7% of mobile subscribers. Some 80.3% of subscribers are not accustomed to sending sms, and this consequently reduces the likelihood of using USSD technology.
The lack of texting is justified by the fact that the Chadian population is very poorly literate, at a percentage of only around 22% according to 2018 World Bank data.
In view of the above, it is highly unlikely that the service offer will be attractive to subscribers who are used to using voice rather than sending text messages.
It seems essential to revisit strategies and adapt platforms to local needs and habits.
In Senegal, for example, Wave mobile money, a success story in digital finance in West Africa, has noticed that the habits of certain rural communities with low literacy levels are moving in the direction of handling USSD technology less and less. These users were less interested in the offer and inactive for a while until Wave mobile money made QR cards available, enabling them to access the service without using USSD or a smartphone. Today, these communities routinely use the service.
- The absence of multi-partnership
Integration with financial entities other than banks, such as insurance and microfinance companies, or various merchant services, etc., is essential to guarantee a diversity of payment solutions for people excluded from the traditional financial system.
The poor perception of mobile money's relationship with banking makes it more confused with banking services. Yet mobile money is an alternative solution to the low rate of bank penetration in Africa.
In Chad, this low rate of bank penetration excludes the vast majority of the population from the traditional financial system, leaving many economic operators on the margins of the formal economy.
Mobile money is renowned in Africa for its ability to offer a wide range of transactions to people previously excluded from the financial system, and thus contribute to financial inclusion.
It is the responsibility of decision-makers to guarantee a favorable environment for the emergence of the service, and to offer a regulatory framework adapted to the country's context for the development of the service for the benefit of the population. It is also essential for the service's promoters to multiply their partnerships with all the players in the economic fabric, in order to offer a wide range of payment options through the service. This will increase the attractiveness of the service to users, and guarantee its development. However, this requires a favorable commissioning policy.
Mbaiodjibey Ndadoum Eric
Consultant/Business strategy & mobile money development
