Impact of Mobile Money Transfer on the Education Sector in Sub-Saharan Africa: A Review

Introduction

The United Nations Sustainable Development Goal (SDG) number four aims to provide free, equitable and quality primary and secondary education by 2030. In many sub-Saharan Africa (SSA) countries, secondary education is not free and, despite there being ‘free’ primary education in some countries, there remains non-tuition costs like uniform, books, examination, meals and sports that must be met by parents. These non-tuition costs make up to 56% of household’s education budget (Braniff, 2016). For example, most average Kenyan families spend about 11% of their monthly expenditures on education (Collins, Cojocaru, & Zollmann, 2015). Many families are not able to meet the expenses of taking their children to secondary schools leading to low transition rates.

Countless families in SSA depend on donations from relatives and sponsors to meet the financial obligations of educating their children. Since the introduction of mobile money services in Kenya in 2007 by Safaricom, a wide range of products have been developed to digitalize financial services and provide the unbanked community from the low-income backgrounds with manageable options to transact in flexible modes without necessarily having to open a bank account. The benefits accrued as a result of these developments are undeniable and range from saving time, improving livelihoods, efficiency, transparency, traceability, security and good relationships between parents, students and learning institutions.

Mobile money transfer (MMT) technology is a payment system that is linked to a mobile phone and allows an account holder to store money, transfer to other accounts or transact in many ways. This was initiated to allow customers to make person to person (P2P) transfers digitally without the need for a bank account or wire transfer (Suri, 2017). Consumers have been able to save money, pay bills, make person-to-business (P2B) payments, receive payments like salaries or wages and receive government-to-person (G2P) services – and vice versa.

In order to transact, a client must first register with an agent using government-issued identification documents. The client deposits money into their account by giving the amount to the agent, who enters it into the system using their business mobile phone. The client receives a notification SMS (Short Message Services) within a few seconds indicating the amount deposited and the new balance. They can then use the SIM (Subscriber Identification Module) card menu to transfer any amount from their available balance to a different account or make payments for any services. Since the advent of mobile money in Kenya by Safaricom in 2007, it is now possible to pay for almost any services via mobile money through a wide range of platforms developed by telecommunication companies and banks.

Several countries such as Cote d’Ivore, Uganda, Guinea, Mauritius, Tanzania, Kenya and Rwanda have well developed person to government (P2G) payment platforms for tax collection, school fees payment and for health services using MMT (GSMA, 2017). Innovative ideas and initiatives have been developed around MMT to enhance easy and efficient operation in many sectors for instance in agriculture where farmers accept payments via MMT in Uganda, promoting clean energy use through pay-as-go models in most East African countries, prepaid water utilities in Niger, as well as humanitarian services for refugees in Kenya and Uganda (GSMA, 2018). New products and apps are being established every year to diversify the market and meet the needs of different customer cohorts.

This aim of this review is to highlight the adoption of MMT for fee payment in the education sector and how this has contributed to improved access to financial inclusion and access to education. The background will highlight the scenario in terms of education status based on published reports and how costs related to education are met as well as an overview of the penetration rate of mobile money in the region. The impact of digitalization of fee payment systems on the education sector is then presented with a focus on the main models that successful countries like Kenya and Cote d’Ivore have implemented to improve efficiency in payments. Other models adopted by other countries are also discussed.