The amount of money sent to sub-Saharan Africa via mobile services is expected to hit $33 billion this year, reflecting the increasing number of mobile phone users on the continent.
There has been significant growth in mobile money remittances in Kenya, South Africa and Uganda recently but there has been stagnation in Nigeria, Africa's largest telecom market by investment and subscription, according to WorldRemit, a global money transfer company. Still, Nigeria, which received $21 billion in 2014 via mobile money, accounts for two-thirds of remittances to the region.
East Africa in particular has recorded significant growth of mobile money services, mainly because of expanding usage in Kenya and Tanzania, while uptake in many West African countries has been slow.
The growth of mobile money services in many countries in the region has been helped by African governments, which have crafted favorable regulatory policies. This has resulted in stiff competition between banks and mobile phone companies.
The rise in the use of mobile money has further been fueled by the increasing availability and use of mobile phones as operators compete to capture customers even in rural areas, to increase their customer base.
WorldRemit said there are 261 mobile money service providers in the world and that half of the services are in sub-Saharan Africa.
Mobile money will play a pivotal role in global remittances, helping to reduce fees and sped up fund transfers for users, said Alix Murphy, senior mobile analyst at WorldRemit.
"Most importantly, mobile money is a key enabler of financial inclusion," Murphy said. "There are currently two and a half billion unbanked people in the world. One billion of these people already have access to a mobile phone and so a potential means of accessing financial services."
African banks are among the companies looking to increase investments in mobile money services to capitalize on growing consumer interest.
In Zambia, Zimbabwe and Kenya mobile money accounts have already surpassed traditional bank accounts. Mobile phone service providers in the region are competing aggressively on the provision of mobile money services because revenue from the voice market is declining due to stiff competition.
Fearing that they will become irrelevant, banks have also begun providing mobile money services to customers, and in some cases, partner with operators.
Many governments in Africa have problems overcoming the longstanding challenge of reaching out to people who do not have bank accounts. But there is growing sentiment among political leaders that the need for financial services for the so-called unbanked will increasingly be met by banks and mobile phone operators using mobile money technology.
Most Africans are using mobile financial services to buy goods, pay utility bills, send and receive money.