The prepaid economy of Africa

By | April 7, 2013

As the chart shows, Africa’s mobile subscriptions are 96% prepaid or pay as you go. That is, they are not bound by contract to any mobile services provider. A reasonable number have more than one SIM, to take advantage of different operator offers.

This demographic cuts across all income, education and professional barriers, its literally the Prepaid Economy of Sub Sahara, when only 4% of the phone users sign up for an unknown monthly bill. Many of them are in South Africa, where having a monthly subscription to mobile services is an immense jump in status signalling.

When such a significant majority of the phone users in Africa choose to pay as they use voice and data, on demand and usually on a preset budget, it is a strong signal of the characteristics we would look for in order to understand the local cash economy. This could be primarily from the informal sector, if only because of the irregular and unpredictable income streams from a variety of sources over the course of the natural year are what everyone has in common.

This is reflected in the prevalence of a flexibile system that offers the end user the maximum control over how much (time – duration, periodicity, frequency) and how much money (airtime – money, voice, text, data) they allocate among their resource base, in order to minimize the variance between income flow and outgoing expenses, thus decreasing the volatility of their irregular incomes. Nobody was paying them a regular monthly salary, on which basis they could budget and plan with some accuracy of estimated amounts.

A sample of the rural population demographic was set 4 questions in rural India, rural Philippines and semi-rural Malawi.

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