Voice of the Industry

Mobile money – unlocking the African market

Monday 23 July 2018 09:49 CET | Voice of the industry

Rossini ZumwaltEmergent Payments: "Global merchants looking to launch in Africa should prioritise mobile money as a part of the local payments strategy."

“The leapfrog effect” is a term often used to describe Africa’s technology evolution – from typewriter to smartphone. Sub-Saharan Africa has long lead the charge in mobile industry expansion and a recent report highlights the scale of ecommerce opportunity here may be even bigger than once thought.

According to the latest edition of GSMA’s Mobile Economy report series released last week, more than half of Sub-Saharan Africa will be connected to mobile by 2025. The report predicts that in the next seven years we will see unique mobile subscribers rise from 444 million to 634 million. 40% of the region’s population is under the age of 16. While this demographic has significantly lower levels of mobile ownership than the rest of the population, as they get older the stage is set for an even bigger mobile boom.

For merchants looking to launch in Africa, this means becoming prioritising mobile money as a pivotal part of the local payments strategy. The electronic mobile wallet service enables users to store, send and receive money using their mobile device. It is a popular alternative to bank accounts and has played a major role in greater financial inclusion.

How does mobile money work?

Ghana is a great example of a market that has become increasingly dominated by mobile money. 61% of ecommerce sales in Ghana are now carried out with mobile money. MTN mobile money is the largest operator there, but there is also Airtel and Tigo. To put this into perspective, the next most popular payment method in Ghana is locally issued cards. This captures only 15% of the market and is largely limited to the upper class. Where mobile money has been successful is in financial inclusion and opening up ecommerce to the masses.

During my recent payments trip to Ghana, I was able to see firsthand just how widespread adoption is. We saw kiosks everywhere we went. What’s more remarkable is that mobile payments have only been on the scene in Ghana for a few years and the market is at a turning point. There are around 9.4 million subscribers and 122,000 active agents. Compare this to Kenya – where the mobile payments landscape has been evolving since 2000 – this country has over 34 million subscribers and 165,000 active agents. You can see the potential for further growth here and we expect Ghana to quickly catch up to Kenya. The most common way we observed African consumers adding money to their mobile money accounts was through direct cash deposit at a mobile money agent kiosk. Funds can also be transferred from a bank account to a mobile money account or also received directly from another mobile money account.

However, the ease of mobile money is reliant on local infrastructure. In a recent Bloomberg report, Nigeria is falling behind, despite being Africa’s biggest mobile phone market. One of the obstacles Nigerian consumers face is that they are required to use a Bank Verification Number to make mobile payments. This works against the objective of mobile money in reaching the unbanked. As a result, financial inclusion in Nigeria has declined in the last three years. At the same time, across the region the number of banked people has in fact increased. What this has highlighted is the need for infrastructure to support the popularity and economic potential mobile money can harness. According to Bloomberg, the Central Bank of Nigeria is facing the reality that it will not achieve its targeted 80% financial inclusion by 2020 if something does not change.

What does this mean for global merchants?

One of the key mistakes to avoid is approaching Africa as if it is a country and not a continent with multiple different markets. Consumers across the region have diverse motivations, payments preferences and behaviors. In large part, infrastructure plays a big role in shaping this. Despite the complexities, these markets are ripe for ecommerce expansion. With a rapidly increasing population of one billion people, there is huge potential for impactful growth. Consumers are becoming more educated, more tech savvy, demanding more Western goods and services and exhibit meaningful brand loyalty. The key to success is effective local payments strategy and a customised market approach.

About Rossini Zumwalt

Rossini has extensive experience in setting up strategy and managing operations for ecommerce payments and risk, both as a merchant and solution provider. She served as a Senior Director at Symantec and, prior to that, as Head of Global Treasury. She also held several leadership roles for the Merchant Risk Council.


About Emergent Payments

Emergent Payments offers a total global and local payments solution for high-growth markets. They serve as a payment facilitator for digital merchants in the Asia Pacific, Latin America, Africa and the Middle East. For more information, visit www.emergentpayments.net

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Keywords: Emergent Payments, Rossini Zumwalt, mobile payments, mobile money, Africa, Kenya, Gana, ecommerce, merchant, local payments, Nigeria, Central Bank of Nigeria
Countries: World