Africa’s cashless future is possible
Is it possible that in the next decade African countries will be cashless? My answer is a firm NO but most of transactions will be cashless.Africans were so used to paying by cash but now some people legitimately get mad when a supermarket or retailers doesn’t have mobile money payments options in countries like Kenya, Uganda and Tanzania.Africans are making paying for things extremely efficient and thoughtless across the board. It’s already so easy to blow heaps without saying a sad goodbye to those old bank notes, and in the next ten years majority of people will probably have chips in their hands that they’ll just wave over the counter.Africans currently withdraw more than $50 billion from ATMs each month according to 2016 data, however new research has revealed that cash will be obsolete within the next ten years, with smartphone and tablet transactions becoming the norm. So although most of Africans grew up learning the value of cash through pocket money made up of notes and coins, the next generation will apparently be in for a very different experience.According to the data available to your blogger, the African economy is transitioning into a completely cash free phase due to the amount of financial transactions being carried out using mobile electronic devices, which will continue to grow until it leads to the death of notes and coins money as Africans know it today. It therefore comes with no surprise that African countries like Kenya has a very highly mobile payments population, where over 25 million payments circulate amongst 40 million people with more than 20% of all payments being non cash.However, there is one step between now and then, which is the total digitization of payment system and it’s not that far away.African countries like Mauritius and Kenya are already way up there on the cashless front and in fact those two countries together with South Africa have among the continent’s highest proportion of contactless payments. Now more than 50 per cent of face-to-face mobile transactions are contactless, and cash payments have dropped. Phone apps will accelerate the move away from cash even more. And although the pay on your phone thing is bigger in the developed countries, the only question is when, not if.It would be a brave person who’d back cash against phones. The phone is the one item all Africans carry.
The convenience of not having to also carry cash will win the day.There’s another benefit to cashless payment, other than being able to get in and out of the retail shop as quickly as possible, and that is crime prevention mainly people seeking to avoid liability for tax or crime. This is why African governments should support the digital revolution. And if African governments did support going completely cashless, it would be in the government’s interest to do so, then the base for income tax will grow because that off the books stuff is suddenly back on.The most obvious problem, which is how do the very poor in Africa, who can’t afford to go digital, live in a cashless society.It would require that all Africans have access to digital financial services. It would obviously be in the government’s interest to make sure everyone is able to participate as a way to alleviate poverty. Africa’s financial services sector doesn’t serve the needs of low-income earners because they are regarded as less profitable, and that a national financial inclusion strategy would help everyone to have effective access to financial services and help with their financial literacy.Many Africans are still very wary of relinquishing cash control. However what needs to be noted is the various ways this payment evolution will improve lives because it’s faster. In an age where time is becoming an increasingly scarce commodity, contactless transactions are paving the way forward. It’s also safer. Along with the emergence of new mobile payment solutions, many people have become concerned with security, questioning how safe their money really is. But with increased security it means Africans don’t have to risk carrying large amounts of cash. Another benefit is that it’s more convenient. Most of African have mobile phones on them whenever they leave the house. Not only will these payments cut the amount of items you need to carry everywhere, but this will also mean fewer lines at stores due to the increased service speed of not having to count change.Its also good to note that it’s cheaper because the removal of cash will add extra money into people’s pocket. Every year African governments spend hundreds of millions of dollars on printing money and minting coins, which come out of people’s taxes. Removing this cost will mean these funds can be spread across sectors that make more of a significant impact on individuals, benefiting people’s bank account. A very different payment experience will be upon Africans in the not too distant future, and although it will take some getting used to, this shift to a cashless society is a positive change, and one that will help African countries move towards a more efficient way of living.