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Mobile Money Dependency: The Risk of Relying on Telcos for Financial Inclusion

Africa’s mobile money revolution has been praised as a rare and unqualified success in the global south—a demonstration of how innovation can flourish even in the absence of extensive infrastructure. Platforms like M-Pesa in Kenya and MTN Mobile Money in Ghana have become lifelines for millions, offering essential financial services to those excluded from traditional banking. It’s easy to view this as an unassailable good, a victory for ingenuity and inclusion. But beneath the triumphalism lies a thorny issue: what happens when a region’s financial ecosystem is dominated not by banks or governments but by telecom companies?

The rise of mobile money has created an unusual reality in Africa, one where telecom giants play the dual role of technology providers and financial gatekeepers. While this model has brought undeniable benefits, it has also created a precarious dependency. Mobile money systems, after all, were not designed with the same goals or oversight as traditional banking institutions. This raises questions about monopolistic practices, regulatory gaps, and the long-term economic vulnerability of systems built on the backbones of telecom networks.

A critical concern is the monopolistic control exerted by telecom companies over mobile money services. In many African countries, the market is dominated by one or two major players, such as Safaricom in Kenya or MTN in West Africa. These companies have built ecosystems so pervasive that it’s difficult for competitors—or even governments—to intervene meaningfully. Safaricom’s M-Pesa, for instance, controls an estimated 99% of the mobile money market in Kenya.

While monopolies can drive efficiency in the short term, they also stifle competition. Smaller players and startups find it nearly impossible to break into these markets, which limits innovation. Consumers, meanwhile, are left with fewer choices and are often subjected to steep transaction fees that these telecom behemoths can charge unchecked. For many users, the cost of sending money or withdrawing cash eats significantly into their already modest incomes—a problem exacerbated in rural areas where financial alternatives are non-existent.

The dominance of telecom-led financial services also exposes a glaring regulatory gap. Mobile money operates in a grey area between telecommunications and banking, which complicates oversight. Central banks are typically responsible for regulating financial systems, but telecom regulators often oversee the operational aspects of mobile money platforms. The result? A fragmented framework that struggles to hold telecom companies accountable for financial irregularities or consumer protection.

This lack of cohesive regulation has allowed some telecom companies to exploit their position, prioritising profitability over public good. And because they are not traditional financial institutions, they often lack the safeguards that protect users’ funds in case of insolvency or fraud. Unlike banks, many mobile money providers do not offer deposit insurance, leaving users vulnerable in the event of a crisis.

The larger question is what happens to national economies that tether their financial systems so tightly to private telecom operators. For one, the heavy reliance on mobile money creates systemic risks. Should a major telecom provider face financial trouble, it would have a domino effect on millions of users who depend on its services for day-to-day transactions.

Consider the hypothetical scenario of a network outage or cyberattack on a telecom operator like MTN. Such an event would not only disrupt communication but also paralyse financial transactions, from paying school fees to buying groceries. In countries where mobile money has supplanted cash for much of the population, the consequences would be catastrophic.

Furthermore, foreign ownership of many African telecom companies raises concerns about economic sovereignty. The profits generated from mobile money systems often flow to shareholders outside Africa, creating a scenario where local economies are inadvertently financing global corporate interests. This capital flight weakens the long-term development of local financial systems and prevents reinvestment in critical infrastructure.

None of this is to suggest that mobile money should be abandoned. Its role in improving financial inclusion is indisputable. But as it stands, Africa’s reliance on telecom-led financial systems is unsustainable. Policymakers must take steps to diversify the ecosystem and mitigate the risks posed by telecom monopolies.

Governments, for instance, could encourage greater interoperability between mobile money platforms, allowing users to transact across different networks seamlessly. This would reduce dependency on any one provider and create a more competitive market. Regulators must also adopt comprehensive frameworks that treat mobile money with the same rigour as traditional banking, ensuring consumer protections, transparency, and financial stability.

Another approach would be to empower local banks to collaborate with fintech startups, creating hybrid solutions that combine the reach of mobile money with the robustness of formal banking. Public investment in digital infrastructure, meanwhile, could reduce the reliance on private telecom networks and create opportunities for alternative financial services to flourish.

The allure of mobile money lies in its simplicity: a phone, a SIM card, and a small transaction fee are all it takes to participate in the financial system. But simplicity can breed complacency. By ceding so much control to telecom companies, Africa risks building a financial ecosystem that is fragile, inequitable, and overly dependent on the profit motives of a few corporate giants.

To secure its financial future, the continent must move beyond reliance on telecom-led systems and embrace a broader vision of inclusion—one that balances accessibility with resilience and innovation. Mobile money may have brought Africa to the table of financial inclusion, but the next step is to build a system that ensures everyone has a fair and secure seat.

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