West Africans are switching from cash to mobile money because of COVID-19

Penda Kande usually pays for taxis in cash, but since coronavirus hit Senegal, the 30-year-old nurse has switched to mobile money to avoid contamination.

"With the virus it's better to use Orange Money," said Kande, referring to the West African country's most popular mobile money service, offered by French telecoms group Orange.

She was one of several clients making withdrawals or deposits with mobile money agents on a street corner in Senegal's capital Dakar last week, where one Orange Money agent said business had nearly doubled since coronavirus hit.

Mobile money providers across Africa have reduced or waived transaction fees and governments are encouraging digital payments to reduce person-to-person contact and potentially slow the spread of the virus.

In West Africa, where mobile money is growing fast but still used by only about one in four adults, industry experts and analysts said the outbreak could be an opportunity to increase usage and include more people in the digital economy.

"I think right now there is a really key trigger point, and that could be seized on to leap forward," said Jill Shemin, an independent consultant on digital finance in West Africa.

Mobile money has been hailed as a way for people excluded from the formal financial system - including women, youth and the rural poor - to access services such as savings and loans, start businesses and receive payments.

In East African countries such as Kenya, Uganda and Tanzania, it is already the currency of choice for everything from daily shopping to paying bills, driven largely by the success of Safaricom's service M-Pesa.

But mobile money arrived later in West Africa, where barriers include low literacy and lack of trust as well as lack of necessary documents and a preference for cash, according to the telecoms industry group GSMA.

While coronavirus has given people a new incentive to go digital, operators have also lowered barriers by making it cheaper and in some places easier to sign up, said analysts.

"I do believe this could be a catalyst for high adoption," said Ruan Swanepoel, head of the GSMA's mobile money programme, citing government efforts to encourage digital payments and ease regulation as deciding factors.

In one example, Ghana's central bank announced that all mobile phone subscribers could open a mobile wallet and transfer up to 1,000 cedis ($170) daily without providing additional documentation.

Required documents such as ID and proof of address vary by country but can be a barrier particularly for women to open accounts, said Sabine Mensah, regional digital lead for the United Nations Capital Development Fund (UNCDF).

"It is an encouraging thing to see that in these times, when we really need to find ways to include the maximum number of people, that central banks are taking that question out of the way," Mensah told the Thomson Reuters Foundation.

LOWERING THE BARRIERS

Tayo Oviosu, CEO of Nigerian mobile money company Paga, with 15 million users, said that he expected to see an uptick in new accounts and transactions after lowering fees to help people avoid cash.

"We do see a real opportunity to drive... financial inclusion," he said.

Lowering the barriers for mobile banking can also help people weather the economic impact of the outbreak, said Alfred Hannig, executive director of the Alliance for Financial Inclusion, a global network of policymakers.

"If you want to mitigate the crisis, digital financial services for the poor is definitely an avenue to look at," he said.

Many West African governments have already been working toward digitising social payments such as pensions and welfare and should fast-track the process now, said Mensah of UNCDF.

As countries around the world consider digital payments as a way to get money to citizens during the pandemic, lack of financial inclusion is a major barrier, said the Center for Global Development think tank in a report released on Tuesday.

"We found that the lack of bank and mobile money accounts is the biggest gap in digital readiness. It's hard to get money to citizens who don't have either," said Anit Mukherjee, an author of the study.