The growth of mobile money in sub-Saharan Africa over the past decade has been extraordinary, both in scale and in its effects on welfare. According to the World Bank’s Global Findex 2025, 58% of adults in the region now hold a financial account, up from 34% in 2014, with mobile money accounting for the bulk of that expansion. The GSMA’s 2026 industry report records 2.3 billion mobile money accounts worldwide, with Africa concentrating roughly two-thirds of global transaction volumes (approximately $1.4 trillion in 2025 alone). These are not marginal figures. They represent a fundamental shift in the way financial services reach populations that the traditional banking sector has largely failed to serve. The impact of this shift on poverty and resilience is supported by rigorous empirical evidence. Suri and Jack (2016), in a widely cited study published in Science, showed that access to M-Pesa in Kenya lifted 194 000 households out of extreme poverty, with particularly strong effects for female-headed households. Earlier, Jack and Suri (2014) had established in the American Economic Review that non-users of M-Pesa experienced a 7% decline in consumption following negative income shocks, whereas users were largely unaffected, the mobile wallet functioning, in effect, as a mechanism for risk-sharing within family networks.
Mobile money has clearly delivered genuine gains in financial inclusion. The question this article seeks to address is different: whether the regulatory frameworks governing mobile money operators across Africa are adequate for the risks these operators now carry. The answer, upon close examination, is that while meaningful regulation exists (more than is generally appreciated), several critical gaps remain. These gaps are not negligible, and they matter for the stability of the financial system, for the real economy, and for the operators themselves.
A look back at history. It started in Kenya, when Safaricom launched M-Pesa in 2007. Few predicted it would become the most studied financial innovation in the developing world. But the evidence is now overwhelming. The mechanism is elegant: mobile money makes transfers within family networks faster and cheaper, turning the handset into an informal insurance system. The innovation then spread westward. In Senegal, the arrival of Wave in 2018 sent shockwaves through the market. Transfers at 1%, deposits and withdrawals free of charge: within a few years, the fintech had amassed 21 million monthly active users and deployed 150000 agents across eight countries. Orange and MTN, caught off guard, were forced to match. In Côte d’Ivoire, they ended up scrapping withdrawal fees altogether. In October 2025, Wave crossed a symbolic threshold: it created Wave Bank Africa S.A., a fully licensed commercial bank headquartered in Abidjan with CFA 20 billion in capital. From mobile wallet to banking licence, a trajectory worth watching closely. In Rwanda, the interoperability platform ekash helped push financial inclusion from 21% to 90%, one of the most dramatic leaps on the continent. In Togo, rated “very high” on the GSMA’s Mobile Money Prevalence Index, Gozem Money launched in 2025 and Mixx Togo inaugurated instant payments via the BCEAO’s regional PI-SPI platform. In the DRC, financial inclusion stands at 58%, but actual bank penetration barely reaches 25%: the gap is filled entirely by mobile money. In Burkina Faso, Ky, Rugemintwari and Sauviat (2018) found that mobile money increases the propensity to save, though, as we shall see, the channel through which savings flow matters considerably. In Togo specifically, Meli, Kamga and Meli (2024), confirmed the spread of mobile money adoption while noting that income, education and gender remain powerful determinants of who gets in, and who does not. The progress is real. The question is not whether mobile money works. It does. The question is whether the regulatory architecture behind it remain relevant to preserve financial stability.
Rules exist and play a critical role in mobile money development. Evans and Pirchio (2015), studying 22 countries, showed that regulation is often the decisive factor in whether mobile money takes off or stalls. The IMF’s 2025 departmental paper on digital payment innovations in sub-Saharan Africa confirms the point: differences in regulatory approach, whether a country protects incumbents or enables new entrants, explain much of the divergence in adoption trajectories across the continent (Ricci et al., 2025). In the WAEMU zone, for example, the BCEAO built a structured framework around Instruction No. 008-05-2015. Only licensed Electronic Money Issuers (EMIs), banks and authorised microfinance institutions may issue e-money. The minimum capital requirement is CFA 300 million (roughly 440 KEUR). Client funds must be ring-fenced: at least 75% held in demand deposits at commercial banks, the remainder in term deposits or treasury bills. The EMI may not lend, may not pay interest on balances, and may not use client funds for its own purposes. The WAEMU Banking Commission monitors two key ratios: a coverage ratio (equity must be at least 3% of outstanding e-money) and an equivalence ratio (ring-fenced funds must cover 100% of outstanding e-money). A 2024 update, Instruction No. 001-01-2024, tightened anti-money laundering obligations and created a new payment institution licence. Elsewhere, approaches differ. In Kenya, the Central Bank of Kenya supervises M-Pesa under the National Payment System Act of 2011. Client funds are deposited in trust accounts at commercial banks, a model unique on the continent. Interest generated on those funds flows to a charitable foundation rather than to Safaricom’s bottom line. It is worth emphasising that the welfare gains documented by Suri and Jack were observed within this supervised environment, not in the absence of regulation. Ghana ranks first in Africa on the GSMA’s 2024 Mobile Money Regulatory Index. Nigeria, long wedded to a bank-led model, opened the door to telecom operators in 2021; in January 2026, the neobank Kuda secured a full national banking licence from the CBN, following the same trajectory as Wave in Côte d’Ivoire.
All of this is serious. But look closer. In May 2023, the WAEMU Banking Commission held its first-ever meeting with the chief executives of the region’s EMIs, eight years after the founding Instruction. One number from that meeting should have attracted more attention than it did. The equivalence ratio, the metric that measures whether outstanding e-money is fully backed by deposited funds, stood at 82.5%, against a regulatory target of 100%. Four out of ten EMIs were non-compliant. In plain terms: across a zone spanning eight countries from Senegal to Togo, nearly a fifth of circulating electronic money was not fully backed. For a system whose fundamental promise is instant convertibility into cash, this is a warning signal. Banks, one might object, also run liquidity mismatches, and that is, after all, the essence of banking, which transforms short-term deposits into long-term loans. True. But banks have safety nets to manage that risk: calibrated liquidity ratios (the LCR and NSFR under Basel standards), access to central bank refinancing as a lender of last resort, and deposit insurance schemes. My own research on liquidity regulation in European banking (Ananou et al., 2021, 2023) has shown that the introduction of liquidity requirements, leads to measurable reductions in bank default risk, primarily through improved capitalisation and funding structure. EMIs, by contrast, operate without any of these backstops. When the float is not fully covered, there is no safety net.
The problem deepens when you examine deposit protection. In the WAEMU zone, the FGD-UMOA covers deposits held at banks. But what happens if an EMI fails? Ring-fenced funds are held in accounts in the EMI’s name, not in the name of individual customers. Legally, the customer of Orange Money or Wave is not a depositor in the prudential sense: they are a creditor of the issuer, holding a promise of repayment. In insolvency, they would rank as general creditors, not as guaranteed depositors.[1] The CGAP, in its reference study on client fund protection, puts it plainly: the treatment of e-money float by deposit guarantee schemes is not entirely clear. A necessary caveat: deposit insurance in Africa is itself a young mechanism. The WAEMU scheme has never been tested by a major bank failure. Kenya’s deposit insurance corporation has limited resources. The point is not that banks are perfectly protected and EMIs are not. The point is that for EMIs, the legal question has not even been settled.
More troubling still is the absence of resolution frameworks. In the WAEMU zone, banks have had a crisis resolution mechanism since 2015. In Kenya, the CBK has comparable tools. But across the continent, no regulator has created a resolution framework specific to mobile money operators. No preventive recovery plans. No mechanism to transfer customer accounts to another provider if an operator fails. If Wave, with its 21 million users, or MTN MoMo, with its daily volumes, were to face distress, supervisory authorities would have no legal instrument to organise an orderly transition. The only tool available is licence revocation, which is a punishment, not a crisis management device.
The question of systemic risk compounds these concerns.[2] The flows between banks and mobile money operators have reached proportions that make the exclusion of EMIs from macro-prudential surveillance increasingly difficult to justify. Global transfers between bank accounts and mobile wallets exceeded $160 billion in each direction in 2025. Ky, Rugemintwari and Sauviat (2025), studying 141 banks across the East African Community, found that bank performance is positively correlated with involvement in mobile money, but that this association operates through bank-operator partnerships, implying growing mutual dependence. Kulu et al. (2022) confirmed this interdependence in Ghana as well.
Finally, there is the question of fraud and algorithmic lending. In August 2025, a viral campaign (#StopAirtelThefty) erupted in Uganda after cases emerged of stolen phones being used to drain Airtel Money accounts and fraudulently subscribe to loans, without enhanced identity verification. The GSMA acknowledges that 19% of mobile phone owners in low- and middle-income countries report receiving scam or extortion messages. In sub-Saharan Africa, roughly half of mobile money account holders do not protect their phone with a password. Meanwhile, 44% of mobile money providers now offer credit, often using machine-learning models that score customers based on transaction histories. No central bank on the continent has published guidance on the use of artificial intelligence in mobile lending. The technology is moving. Regulation has not caught up yet.
And then there is the tax question. In September 2025, Senegal’s National Assembly adopted a fiscal reform that increased taxation on mobile money transactions. Wave disclosed it had paid over CFA 30 billion in taxes in Senegal in 2024 alone. The tension is real and plays out across the continent: Uganda, Cameroon, Côte d’Ivoire and Tanzania have all experimented with mobile transaction levies, with documented effects on transaction volumes and a documented push back towards cash. The structural dilemma is clear: mobile money creates a visible tax base, but taxing it too aggressively risks undermining the very inclusion it has enabled. We a piece on that worth reading.
One might be tempted to dismiss these gaps as technical, even theoretical. They are not. Merchant payments via mobile money reached $155 billion in 2025. Bulk disbursements (salaries, subsidies, social transfers) exceeded $139 billion. International remittances through mobile channels totalled $45 billion. These are no longer person-to-person transfers: they are the rails on which entire economies run. Mobile money is not a complement to the financial system. It is the financial system for millions of people. A prolonged outage or operator failure would have immediate macroeconomic consequences: blocked salary payments, disrupted supply chains, interrupted social transfers.
Financial stability is also at stake. If an EMI were to withdraw its ring-fenced deposits from a bank (say, by switching partners), it would create a liquidity shock. If a bank holding ring-fenced funds were to fail, it would be mobile money customers’ funds that are exposed. The channel is bidirectional. It is supervised by no dedicated instrument. Importantly, Ky, Rugemintwari and Sauviat (2021), using individual-level survey data from Burkina Faso, found that mobile money users are not more likely to make deposits in formal financial instruments. The mobile money system and the formal banking system coexist as parallel rails rather than as a pipeline from informal to formal finance. This finding challenges the widely held assumption that mobile money serves as a “stepping stone” toward banking. It also has a regulatory implication: if mobile money creates a durable parallel financial circuit rather than feeding into the supervised banking system, then that circuit itself requires appropriate prudential safeguards.
The operators themselves appear to recognise this. Wave’s creation of a bank in Côte d’Ivoire and Kuda’s acquisition of a banking licence in Nigeria are not incidental decisions. These players are actively seeking entry into the regulated banking perimeter, because they understand that the ability to lend, collect deposits, and diversify revenue requires the institutional credibility that a banking licence confers. However, the majority of mobile money operators will not become banks. They will remain EMIs, and it is the EMI framework that needs strengthening.
Mobile money is one of the most important financial innovations Africa has known. From Kenya to Senegal, from Rwanda to the DRC, its impact on inclusion is established by research and visible to the naked eye. African regulatory frameworks are more structured than commonly assumed. But they were designed for a nascent ecosystem, and that ecosystem has outgrown its rules.
Three priorities stand out. First, clarify the legal status of customer funds: are mobile money users depositors or creditors? The answer to that question conditions everything else. Second, create resolution mechanisms specific to mobile money operators, including preventive recovery plans and account portability devices, because licence revocation is not crisis management. Third, bring the largest operators into the macro-prudential surveillance perimeter when their transaction volumes make them systemically important in practice. The goal is not to slow inclusion. It is to make it durable.
References
Ananou, F., Chronopoulos, D., Tarazi, A., Wilson, J.O.S. (2021). Liquidity regulation and bank lending. Journal of Corporate Finance, 69(1), 101997.
Ananou, F., Chronopoulos, D., Tarazi, A., Wilson, J.O.S. (2023). Liquidity regulation and bank risk. Working paper, LAPE/University of St Andrews.
Evans, D.S. & Pirchio, A. (2015). An Empirical Examination of Why Mobile Money Schemes Ignite in Some Developing Countries but Flounder in Most. Review of Network Economics, 13(4).
Jack, W. & Suri, T. (2014). Risk Sharing and Transactions Costs: Evidence from Kenya’s Mobile Money Revolution. American Economic Review, 104(1).
Kulu, E. et al. (2022). Mobile money transactions and banking sector performance in Ghana. Heliyon, 8(10).
Ky, S.S., Rugemintwari, C. & Sauviat, A. (2018). Does mobile money affect saving behaviour? Evidence from a developing country. Journal of African Economies, 27(3).
Ky, S.S., Rugemintwari, C. & Sauviat, A. (2021). Friends or Foes? Mobile money interaction with formal and informal finance. Telecommunications Policy, 45(1).
Ky, S.S., Rugemintwari, C. & Sauviat, A. (2025). Is Fintech Good for Bank Performance? The Case of Mobile Money in the East African Community. IJFE, 30(4).
Meli, S.D., Kamga, B.F. & Meli, C.N. (2024). Determinants of Mobile Money Adoption and Use: Evidence from Togo. Journal of the Knowledge Economy.
Suri, T. & Jack, W. (2016). The long-run poverty and gender impacts of mobile money. Science, 354(6317).
World Bank (2025). Global Findex Database 2025.
IMF (2025). Digital Payment Innovations in Sub-Saharan Africa. Departmental Paper 2025/004.
GSMA (2024). Mobile Money Regulatory Index 2024.
GSMA (2026). State of the Industry Report on Mobile Money 2026.
[1] When a customer deposits money at a bank in Abidjan, Nairobi or Accra, that deposit is explicitly covered by a guarantee scheme up to a defined ceiling. When the same customer loads a mobile wallet (Wave, M-Pesa, Orange Money), they hold a claim on the issuer: a contractual promise of repayment. Ring-fencing protects against misappropriation of funds. It does not protect against insolvency. The distinction is not academic; it determines whether customers recover their money when an operator fails. ↩
[2] Systemic risk refers to the possibility that the failure of a single institution could, through contagion effects, destabilise the broader financial system. Following the 2008 global financial crisis, regulators worldwide developed frameworks to identify systemically important institutions, i.e. those whose failure could propagate losses across the system. In Africa, this designation applies exclusively to banks. Mobile money operators are not subject to it, even when the volumes they process are comparable to those of mid-sized banks. ↩
