When you think about it, it’s quite amazing that small bits of paper and scrap metal can be exchanged for a brand new television or a loaf of bread. In parts of Africa, currency has taken on a new, high-tech form: pre-paid airtime. Cell phones can not only be used for texting, playing games, and updating Facebook profiles; but also for the exchange of goods and services in real life. One of the tools that make this possible is Kenya’s M-Pesa, a system that allows users to exchange money and minutes at the touch of a button.
How Mobile Currency Works
In the case of M-Pesa, any users with a valid ID can deposit, transfer, or withdraw money using their mobile device. This allows you to pay a vendor with airtime minutes, which can then be converted into cash at an M-Pesa shop. As a result, pre-paid cell phone cards can be used as cash to buy food and other consumer goods. In countries where the regular currency is unstable, these can be a more reliable form of payment than regular cash alone, and are often distributed by charities in lieu of traditional payments. A thriving airtime market has grown up around these official services like M-Pesa, with dealers renting out phones or users bartering their minutes for services.
In comparison to local currency, the value of airtime won’t go down in relation to the government’s stability or be affected by inflation. And although an ID is required to open up an account with M-Pesa or other official networks, cheap airtime can also be purchased on prepaid cards completely anonymously. This can be useful for emergencies, settling smaller debts, or simply buying the week’s groceries without delay.
International Use of Airtime
Pre-paid minutes can be used as payment or exchanged for cash in a number of countries throughout Africa, most notably in Ghana, Uganda, Egypt, and Nigeria. Those placing cheap calls to India may now be able to store up minutes using the newly launched M-Paisa, which has teamed up with India’s HDFC bank. M-Pesa has also been launched in countries like South Africa, in which 13 million consumers live without any bank account. Using airtime as currency allows these residents to make purchases without relying on bank cards. You can now call South Africa with Lebara or other providers, but also send minutes abroad using firms like Ireland-based Ezetop. This has created the potential of a more widespread international airtime market.
Concerns about Mobile Currency
For the most part, the use of airtime as currency in Africa is seen as a fruitful use of technology. However, some banking authorities and government officials are concerned about network operators being able to set their own exchange rates and issue their own currency. There’s also concern that cellphone minutes could be used by criminal groups to conduct illegal transactions under the radar.
Despite these potential concerns, mobile currency looks like a trend that’s set to continue.
Mobile in Africa – Some rights reserved by caribbeanfreephoto on flickr
Guest Author Bio
Rachel MacDonald is an Edinburgh-based freelance writer who has worked as a copywriter for businesses from Lima to San Francisco. She specializes in travel, design, and the arts.