Tuesday 3rd of December 2024. Reading time: 8 min. In Senegal, the relationship between banking and mobile money is a complex one. Mobile money enables access to financial services without a bank account, while banking still holds significance for some. A sociology research project examines this relationship among small businesses.

Unraveling the Dynamics of Mobile Money and Banking in Senegal

Mobile Money - A Gateway to Financial Services

Mobile money services provide a means for those with only a mobile phone to make deposits, transfers, and payments. Accessed through USSD menus or smartphone apps, it has spread rapidly in sub-Saharan Africa. In Senegal, Orange Money and Wari are among the active services. Research shows it's widely used by small business owners and the informal sector, even if only half have a bank account.This relative ease of accessing liquidity is one of the reasons for its adoption. It offers an alternative to cash and helps broaden access to financial services.

A Variety of Banking Approaches

In Senegal, banking is still a minority experience. Opening an account is often part of a collective dynamic. It can happen before or after business launch, driven by various factors such as receiving grants or salaries, complying with payment terms, or for strategic reasons like gaining credibility. The choice of bank is often related to personal and professional networking.However, even when accounts are opened for business, they are often in personal names. Small businesses' dependence on digital platforms can also lead to opening bank accounts.

Bank Deposits and Withdrawals - Meeting Professional Needs

Opening a bank account doesn't always mean a long-term commitment. Some shopkeepers and traders find their business incompatible with regular bank use due to cash transactions. The cumbersome process of going to the branch, including fitting opening hours and dealing with queues, leads to a gradual abandonment of bank visits.High account maintenance fees are also a concern, with stakeholders condemning such practices. Merchants with seasonal businesses are less likely to adhere to the banking model.

Mobile Money as an Alternative

Mobile money's transactional services suit the professional constraints of small traders and entrepreneurs. It relies on a large network of agents. In Dakar, shopkeepers are normalizing its use, especially among younger people.Customers play a key role in its adoption. Retailers dealing with Western tourists use it less. But the relationship with customers isn't the only factor. Those with suppliers in other towns are more likely to adopt mobile transfers.However, mobile money doesn't completely eliminate geographical and time constraints. Traders may still prefer cash withdrawals.

The Role of Banking

While mobile money offers advantages, banking remains a mark of professionalism. It enables economic collaborations, especially internationally. Bank financing is often associated with business expansion, even if it's a distant goal. Some respondents open bank accounts early despite being critical of other services.Conclusion: Conventional banking is still important for some, but mobile money has a clear competitive advantage. The success of mobile money among the unbanked is partly due to their dependence on cash. Bank financing remains essential for substantial funding, but it's controversial.