So I’ve just returned from Sierra Leone, world’s poorest (measurable) country according to the UN’s Human Development Index, and while progress is not exactly evident, I was very intrigued by one of the more innovative services now available.
If you’ve ever visited Africa you’re all too well aware of the difficult banking conditions and mounds of bills you’ll be carrying around; if you live there you’re even more well aware of the frustrations associated with getting a bank account, especially if you work in the informal sector (as most do).

The Me2u money transfer service provided by mobile service companies such as Celtel helps address these difficulties.  The Me2U service is a Celtel to Celtel direct airtime transfer which uses the standard GSM based handset. It allows users to share the airtime they have in their phone with other customers, and thus acts as a means of providing payments, remittances or transferring funds. In essence, the mobile phone has become a bank.

The service was first introduced by Celtel in East Africa back in 2005, and is now available in most of the company’s operating areas. As described in the New African in early 2007, “Airtime, which in Africa is becoming a substitute for cash, can today be used for payments at local stores, petrol stations and other businesses, Shopkeepers resell the airtime they take in their “tills” to mobile payphone operators.” In other parts of the Continent, similar technologies have been adapted to facilitate micro-finance payments.

These services coincide with an explosion of mobile ownership throughout Africa. Over the past five years the Continent’s mobile phone use has increased at an annual rate of 65 percent to over 200 million users by the end of 2006. Evidently this growth isn’t surprising given the ridiculously low prevalence of fixed land lines (3 per 100 people) and the very low starting point in mobile ownership at the turn of the century. However, it’s also part and parcel of the availability of cheap mobile phones. A few years back the cheapest phone I could find was a $60 Nokia model.  Now, you can buy a functional , albeit not so pretty, Chinese model  by ZTE for $20.

Where all this falls short, however, is with the issue of inter-operability. In Sierra Leone, there are 5 large mobile companies, and as of yet, none offers users the option to exchange airtime from one company to the next. Given that it takes three days for a payment from one Canadian bank to another, this  shouldn’t surprise me but for the true potential of this mobile banking applications to be unleashed in developing countries, then the walls between corporate gardens are going to have to come down.