27 Sep

Mobile financial services in Africa: Winning the battle for the customer

Africa is the global leader in mobile money, which has become an important component of Africa’s financial services landscape.

Mobile network operators (MNOs) have dominated mobile money services in Africa for the past decade. More recently, fintechs have established a solid footing in the market, and a number of banks are beginning to compete aggressively for the mobile banking customer. While some banks have chosen to “go it alone”, others are forming partnerships in hopes of reaching the market faster. This article outlines five paths banks can take to retain ground in the battle for the mobile customer in Africa.

Africa is the global leader in mobile money

Mobile financial services (MFS) span the full spectrum of financial services, from payments and current accounts, to savings, loans, investments, and insurance. Mobile money, which enables customers to send, receive, and store money using their mobile phone, is a subset of MFS that is provided mainly by telco companies. The underlying funds are typically held by a bank in a dedicated stored value account or a linked current account.

Just over half of the 282 mobile money services operating worldwide are located in sub-Saharan Africa, according to the GSMA. In Africa today, there are 100 million active mobile money accounts (used by one in 10 African adults). This far exceeds customer adoption in South Asia, the second-biggest region for mobile money in terms of market share, with 40 million active mobile money accounts (used by 2.6% of adults)(Exhibit 1).
Exhibit 1
Mobile money now extends far beyond Safaricom’s initial M-Pesa offering, which enabled consumers and small businesses – many of which had little or no access to a bank – to send and receive money quickly and securely across great distances. Today, mobile financial services have expanded to include a broad array of financial services, including credit, insurance, and cross-border remittances, and M-Pesa now accounts for less than a quarter of MFS users in Africa.

Read more: Mobile financial services in Africa: Winning the battle for the customer


11 Aug

The role of mobile financial services in achieving financial inclusion in Africa

mobile banking

Africa is at the forefront of mobile banking. It is also one of the continents with the lowest levels of financial inclusion. Because of the penetration of the mobile phone in the telecommunications sector, mobile banking has taken off successfully in some parts of Africa, especially in eastern and southern African regions.

In sub-Saharan Africa, 36 countries out of 54 have mobile banking services. These include for example, Côte d’Ivoire, Ghana, Kenya, Madagascar, Mali, Nigeria, Niger, South Africa, Senegal, Tanzania, and Uganda.

With roughly 2.5 billion people globally in lower- to middle-income countries who have no access to banking services, the potential is clear. According to a 2016 GSMA study, more than half a billion people across Africa are now subscribed to mobile services, adding more than US$150bn in economic value to the African economy.

Over the last decade, Africa has witnessed high mobile telephony penetration and high uptake of mobile financial services in a number of countries. Mobile telephony has reduced geographical constraints, transaction costs as well as assisting commercial banks to have a cost efficient expansion strategy. A number of factors such as mobile phone penetration, financial and conventional infrastructure development, population density, regulation, and the appetite of private players to pursue the opportunity, tend to drive variation in mobile financial services.

In most African countries, mobile phone banking is taking services to remote areas where conventional banks have been physically absent or too expensive to use. Subscribers can now open accounts, check their balances, pay their bills, transfer money, and buy basic everyday items, all using their mobile phones. Mobile banking is 19% and 54% cheaper compared with traditional banks and informal options respectively. It is also technologically the safest, quickest and cheapest method of transferring money, and for conducting both personal and business transactions.

According to data, there were 557 million unique mobile subscribers across Africa at the end of 2015, equivalent to 46% of the continent’s population, making Africa the second-largest – but least-penetrated – mobile market in the world. Africa’s three largest markets – EgyptNigeria and South Africa – together accounted for around a third of the total subscriber base.

This has made financial services accessible to more people than the traditional banking industry ever had. In addition, many other African countries also experienced robust mobile penetration and the number of unique mobile subscribers is forecast to reach 725 million by 2020, accounting for 54% of the expected population by this point.

The regulatory environment is key to the adoption and spread of mobile banking in Africa and other regions globally. The industry needs to be regulated appropriately, balancing the need for deeper financial inclusion and the KYC imperatives, with anti-money-laundering considerations – especially on cross-border remittances.

In many African countries, banks and mobile network operators are also competing to tap the market of the unbanked population. This is leading to the expansion of financial services to mobile subscribers by providing mobile financial services to the unbanked. Thus, a necessary condition for mobile banking to expand is for regulators, especially central banks, to put in place supportive regulatory regimes. With the increased access to mobile banking and financial services comes the ability to do business in sectors such as the agricultural industry, which accounts for 25% of GDP. Mobile banking allows countries to immediately bring financial services to the masses in a cheap, accessible way – lowering costs for the financial institutions as well as for those who use the services. In the coming years, mobile money, electronic payments and new banking technologies will continue their significant contribution to sustainable economic development in Africa.


Source from HowWeMadeItInAfrica

07 Aug

Flutterwave raises $10 million to build underlying unified payments infrastructure for African businesses

Flutterwave is building underlying unified payments infrastructure for African businesses

Flutterwave, the payment company founded by Iyinoluwa Aboyeji, has just raised over $10 million in a series A funding round. Flutterwave is building underlying unified payments infrastructure for African businesses to accept card, mobile money, and bank account payments. In a year of operation, Flutterwave has garnered 10 banking partners across Africa and processed over 14 million transactions worth $1.5 billion in the last 12 months.

Greycroft Partners and Green Visor have led a Series A funding round of over $10 million in Flutterwave. They will be investing alongside existing investors like Y Combinator and new investors like Glynn Capital. The new capital will be used to hire more talent, build out our global operations and fuel rapid expansion of our organization across Africa.

Over a year ago today, Flutterwave was founded to build underlying payments infrastructure for African businesses to accept card, mobile money, and bank account payments in a single place. Without this payments infrastructure it was impossible for African businesses to scale acceptance of digital payments.

Today, the results of our work in enabling rapid growth for African businesses speak for themselves; $1.2 billion in payments processed. Over 10 million transactions. 10 Bank Partners across Africa. All in just a little over a year of operations. Together with you — our community, our investors, our customers, our supporters, our partners and our family — we have built one of the fastest growing payments companies of all time. From Africa.

For a normal company, now would be the time to rest on our laurels, pursue trends and focus on milking our value chain for easy profit. Fortunately, we are not that kind of company. Africa needs us to keep doing the hard things.

The next chapter for us at Flutterwave is building a global payments technology company that changes how the world does business with Africa. This is why we have partnered with Greycroft, Green Visor, Glynn Capital and Y Combinator — the same teams that helped fund and build global payments giants like Braintree, Stripe, Xoom, Square and Visa.

At Flutterwave, we believe that as software eats the world, the digital economy will increasingly become the new global economy. On the internet, anyone can build a global business from anywhere. Yet, for Africans doing business in the digital economy, it is so much harder than it needs to be.

Only about three percent of adults in Africa report having a credit card. Global technology companies like Facebook, Google and Amazon can’t do business across Africa because they are unable to accept more popular local payment methods like bank accounts and mobile money. Only 4% of African businesses accept digital payments. Without global payments infrastructure a business in Kibera, Nairobi cannot scale across Africa and around the world.

Flutterwave’s global payments solutions will make it easier for Africans to participate in the digital economy so you can make and accept payments for whatever you want, in whatever currency or payment method you want, across the globe. If we are successful, we might just inspire a new generation of Africans to flip the question from “what more can the world do for Africa?” to “what more can Africa do for the world?”.

I will end with the words of Dr Kwame Nkrumah, a Pan-African hero who greatly inspires us at Flutterwave.

“Divided, we are weak. United, Africa could be the greatest force for good in the world.”

Read more


02 Aug

Mobile contributes $110bn to sub-Saharan economies

sub-Saharan economy

Sub-Saharan Africa is, and will continue to be, the fastest growing mobile market in the world, contributing  $110bn to Sub-Saharan economy

By the end of the decade, there will be more than half a billion mobile subscribers in the region, up from 420 million at the end of 2016.

Among the growth drivers is the under-16 age group, which accounts for more than 40 percent of the population in many countries, and women, who are currently 17 percent less likely to have a mobile phone subscription than their male counterparts.

Mobile is now also a significant contributor to the sub-Saharan African economy. In 2016, mobile technologies and services generated $110bn of economic value, equivalent to 7.7 percent of regional GDP.

This figure is expected to grow to $142bn, or 8.6 percent of GDP, by 2020. The mobile ecosystem also employed about 3.5 million in the region last year, and contributed $13bn to the public sector through taxes.

Here are some of the key trends industry group GSMA has observed:

Transforming industries

Across Africa, mobile is transforming traditional industries and enabling innovative business models to deliver affordable and sustainable services.

Perhaps one of the best examples is mobile money, which has been critical in advancing financial inclusion over the last decade. There are now 140 live mobile money services in 39 countries in sub-Saharan Africa, accounting for nearly 280 million registered accounts.

Today, more than 40 percent of the adult population in seven countries – Gabon, Ghana, Kenya, Namibia, Tanzania, Uganda and Zimbabwe – use mobile money regularly.

Utilities are another area where mobile is driving innovation. Mobile-based, pay-as-you-go solar enables access to clean energy solutions, with entrepreneurs partnering with mobile operators to deliver the solution.

Growing by nearly 40,000 systems per month, there are now one million home systems installed globally. Some 95 per cent are in sub-Saharan Africa, impacting about 4.8 million people.

We see similar innovation in sectors such as healthcare, agriculture and others. This is just the beginning as we move forward in Africa’s digital age.

Fuelling economies

Local mobile operators have invested $37bn in their networks over the past five years, mainly to deploy new 3G/4G mobile broadband networks across the region.

Fuelled by growing access to mobile data services and smart devices, the local mobile ecosystem is flourishing, supported by investments from operators and others in mobile-focused start-ups and tech hubs.

Seventy-seven tech start-ups across the region raised almost $370m in funding in 2016, up 33 percent from the previous year.

However, this continued growth and investment is not a given. The mobile industry faces several challenges, such as high levels of taxation and outdated regulatory frameworks.

Positive collaboration is needed between governments and the mobile industry to enable innovation and extend connectivity to all.

Connecting everyone

Looking beyond the numbers, mobile is positively impacting African society and helping to achieve the UN Sustainable Development Goals (SDGs) in time for the 2030 deadline.

Mobile operators across Africa are working together to deploy mobile-enabled solutions to deliver key services such as health and education, increase women’s access to mobile, create employment opportunities and decrease poverty.

Of course, the mobile industry cannot solve the challenges of the SDGs alone – no one can. Governments, industry, humanitarian organisations and individuals must come together to build sustainable partnerships.

Having just visited Tanzania and witnessed much of this first-hand, I am struck again by the power of mobile to foster innovation, to fuel economies and to transform lives across Africa.

[Via thisisafricaonline]