In March, most institutions locked down and business dried up. Consumers are changing their habits and companies are fast-tracking new ideas. In the short-run, the crisis will wipe out profits and sink some firms altogether, but in the long-run, it may accelerate Africa’s digital transformation.
One example is the use of mobile money. In Rwanda, the weekly volume of mobile money transfers rose fivefold over the lockdown, according to data collected in April by the telecoms regulator and analysed by Cenfri, a South African think-tank.
In Kenya, the central bank measured a 10% rise in the number of transfers. Policymakers in both countries had ordered the temporary reduction of transaction fees to discourage physical cash transfers.
The policy was also proactive in Togo, where the government used electronic transfers to support more than 500,000 people through the crisis.
Lockdowns have helped to “open people’s minds” to cashless payments, says Tayo Oviosu of Paga, a Nigerian payments and transfers platform. The number of new sign-ups to its e-wallet has risen by 330% over the previous quarter, mostly through its USSD platform which can be used on basic phones.
Analysis of eight African markets by Cenfri found a 14% increase in online shopping, a 10% rise in usage of logistics platforms, and a 17% fall in e-hailing in the first month of the crisis. The question is whether Covid-19 will permanently shift Africa’s digital transformation to another level.