💸 Mobile money and a fork in the road

TL; DR – Mobile money has given millions the means to shape their lives for the better, particularly in sub-Saharan Africa. And ushered in a wider “fintech revolution”. But what makes fintech frictionless, easy, and fast, also makes it dangerous. We’re at a fork in the road. Will fintech keep giving people the chance to make their life better? Or funnel them towards something worse?


Technology makes your life better when it gives you the power to shape that life. 

In East Africa – where I lived and travelled for the last year – no modern technology has done that more than mobile money.


Mobile money has transformed the lives of people who relied on cash

Mobile money lets you send and receive digital money with a basic feature phone. Additionally, in-person agents let you easily deposit and withdraw cash from your mobile bank account. It’s Venmo meets ATMs, all with simple text messages and USSD codes. No internet connectivity or mobile data needed, just a phone signal.

In East Africa, if you live paycheck to paycheck, or work with small or irregular transactions, or transfer money often between friends and family, then mobile money will have literally changed your life. 

When I lived in Rwanda, a trip to the market included two 1000 Franc ($1) motorbike taxi journeys to get there and back. Then 2000 Francs on fruit at one stall, 3000 on vegetables at another, 600 on fresh samosas, and 5000 for the tailor. These small payments are the bedrock of market sellers’ livelihoods, and mobile money makes them instant, reliable, and secure. Saving and financial planning become simpler too. And I knew a lot of people in Kigali who brought their parents back in their home town their first mobile phone, just so they could send them money whenever and wherever they were. All totally life-changing things.

Mobile money launched in 2007. Fast forward to 2021, and there are 296 million accounts in East Africa and 2.1 billion transactions. The benefits are huge, and everyone wants in.

We should measure whether tech makes someone’s life better by whether it gives them the power to produce a life that means something to them. By whether it gives them agency. That way, you’re not assuming anything about what people value; but giving them the power to shape their life, and its trajectory, as they see fit. It’s one of my core beliefs about tech, and life, and one of the first pieces I wrote and shared.

After I wrote that, one reader pointed me to Amartya Sen and Martha Nussbaum’s ‘capabilities approach’. Capabilities, as Sen and Nussbaum see it, are your ‘real and substantive freedoms’ to do the things you want to do and be the person you want to be. 

For Sen, an economist, and Nussbaum, a philosopher, social justice, policy, and economic development should be geared towards giving people these capabilities

And so, I believe, should building tech. 

On that front, few could argue with how much good mobile money has done over the last 15 or so years. 

One way to test for whether something is giving people agency (or capabilities) is to ask: “would they be doing this anyway, without tech, but not as well?”. Buying and selling goods. Helping friends and family. Saving for bigger purchases. All things people did long before mobile money. Things they want to do, and things that provide a foundation for a good life as they define it. Things they can now do way better (quicker, easier, more securely, etc).

So far, so good for mobile money. 

But we’re at a fork in the road.


What makes mobile money great, can also make people’s lives much worse.

Most Saturdays in Rwanda, I’d watch English Premier League football (soccer). And without fail, before, during and after every game, there would be adverts and promotions for sports betting. One after another, with some of the most famous footballers from Africa, real-time odds, and slick production.

According to the MIT Technology Review, M-Pesa (Safaricom’s mobile money arm, referenced above) processed $737m of betting transactions from March – Sept 2021, up from $436m a year ago. It’s frictionless, it lures you in, and it has you spending money against your better judgement. 

Or let’s take digital credit, another phenomenon made mainstream by mobile money: digital credit.

M-Shwari, M-Pesa’s signature loan product, has an interest rate of 7.5% and an eye-wateringly small 30-day repayment window. That’s a marquee borrowing product, from Africa’s best known mobile money provider. Other, often unlicensed lenders offer much higher interest rates. The media is full of stories about the persistent shaming, cyberbullying and intimidation used to punish non-payment.

Predatory lending and sports betting both work – and have such reach – because of mobile money. What makes it frictionless to buy fruit at the market also makes it easy to place a bet or take out a loan. What makes saving up large amounts quick and easy also makes spending large amounts quick and easy. These “conveniences” might give you short-term relief or satisfaction, but they are more likely to take you away from the person you want to be in the long run.

They remove your future real and substantive freedoms.


Where do we go from here?

Mobile money has laid the groundwork for what is now an amazing boom in fintech in sub-Saharan Africa. More smartphones and cheaper, more widespread 3G/4G means mobile money, while still wildly popular, now coexists with more advanced mobile wallets and payments apps. 62% of venture capital funding went to fintech in Africa in 2021, The next highest sector, health and biotech, was at 8%. Most new startups, and most of the smartest people in the startup ecosystem, are in fintech. 

What’s this talent and money building? 

On the one hand, I’m seeing the emergence of ‘buy now pay later’ features, stock picking platforms, and crypto/blockchain apps that let you speculate on currencies. Products with sizzle, that nudge you to act in ways that are more likely than not to take away your long run agency. Just like sports betting and predatory lending.

Speculation and borrowing of this kind isn’t something that happened before the tech made it possible. Nobody did it before. Nobody would have defined those acts as part of a good or flourishing life. The tech, with its frictionlessness and false promise, gives us the power to act only on our worst impulses.

On the other hand, there’s also plenty of space for new products that give people capabilities.

Frictionless payments open up insurance products to millions of people. Whether it’s fire insurance for townships in South Africa, or flood insurance in Malawi, or drought insurance in Kenya. It gives people the means to retain capabilities even as disaster strikes. 

New remittances platforms let diaspora populations send money back home, cheaply, quickly, securely. 800m people in the world send or receive remittances, and the total sent is three times the sum of global international aid. It’s something people did anyway, and the fintech boom means they can do it even better. 

Wanting to do more, with less, imagining a different future, wanting to pursue life better. These are traits that define us as humans, and why we’ll keep building and using tech. Across Africa, and much of the Global South, mobile money has paved the way for a boom in fintech that’s going to shape how people live more and more. We are, as McKinsey put it, at the end of the beginning of fintech in Africa.

Where we go from here, is up to us. All of us: regulators, developers, designers, policymakers, funders, users. Will we build, invest in, and use fintech that enhances people’s agency? Or which shuttles us down new roads, alien to our previous lives, and against the grain of our values?


🎬 Thanks to Alice Sholto-Douglas for looking at a draft of this.

🤔 Got thoughts? Don’t keep them to yourself. Email me on asad@asadrahman.io. Let’s figure this out together.

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Banner depicts a fork in the road. From Wikimedia Commons, the free media repository.