An incident earlier this week with my local mobile service provider intrigued me to find out how many of my East African compatriots might have experienced the frustration of an uncompleted cross-border transaction.
In the incident, I successfully completed the first few steps after initiating the transaction, only for it to stall. I tried quite a number of times – restarting and using the SIM card in different phones, but nothing.
After calling the provider it emerged that the recipient mobile service provider in Kenya had had an issue with its systems, but that it had been resolved.
Despite this assurance, I still made no headway with my transaction. Suffice it to say that the opportunity cost was quite expensive and greatly inconveniencing not to have concluded the urgent transaction. It took three days to resolve.
How many people must have been inconvenienced, assuming mine wasn’t a freak incident?
The answer is also of interest to industry experts, though for more positive reasons. With East Africa leading in mobile money use in the world, studies have been undertaken to find out the extent cross-border transactions and what lessons could be learned.
In my search I came upon the study is titled, East Africa Mobile Money Cross-Border Payments: Market demand Side published in 2017 by the global financial services consulting firm, BFA.
It makes the obvious note that transactions among East Africa countries are common, except that the higher share of transactions is by people from landlocked countries transacting, whether to send or receive money.
In Burundi, 45 per cent of mobile phone owners had sent, received, or travelled to another East African country, but only 14 per cent of Tanzanians had done so.
Rwanda accounts for 39 per cent of the transactions, with Kenya and Uganda accounting for 23 per cent and 30 per cent respectively.
Sending money to and, especially receiving money from, friends and family was by far the most common reason for cross-border remittances. These use cases were reported by over half and three-quarters of respondents across all countries.
Travelling across the East African countries correlates with mobile transactions and is more than twice as common as sending and receiving money. As above, people from landlocked countries are more likely to travel cross-border, with Tanzanians being the least likely to do so.
Almost a third of Burundian and Rwandan respondents in the study travelled to other East African countries compared to 8 per cent of Tanzanians. Ugandan and Kenyan cross-border travellers were about a fifth of the respondents from each country.
The study suggested several hypotheses as to why Tanzanians appear to be less engaged in regional travel. A possible reason is that Tanzania has stronger trade and travel ties to the Southern African Development Community (SADC) countries on its southern borders.
Tanzania also has a much smaller foreign-born population, at only 0.49 per cent compared to 2-3 per cent in the other countries.
The study also looked at the amounts or transaction sizes sent or received. Median transaction size varies across countries. The median amounts sent varied from slightly less than USD 100 to slightly more than USD 150 in Tanzania.
The amounts sent ranged widely. Depending on the country, 40 per cent to 60 per cent of the reported transactions were USD 100 or less.
The cross-border transactors cover a range of ages, incomes and occupations. And, considering the number of mobile phone subscribers in each of the five countries and the incidence of sending money, the study estimated that, on average, 6 per cent of East African mobile phone subscribers send money to other East African countries.
So, how many people may be inconvenienced should the interoperability systems fail, as they occasionally do?
If we take the 6 per cent of transactors as a working figure of the currently estimated total population of around 180 million in the five countries, their number comes to well over ten million.
These are a lot of people. I may not be able to calculate how many of them may transact per day, but in the event of system failure, the depth of sender or receiver frustration must also be significant. This is not to mention business lost to the service providers.
The thing, however, is that the service providers owe their clients an update should the systems be down. The onus is on their fidelity to regularly check the health of their systems to save their clients what may be a costly inconvenience.
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