Op-Ed by Ariella Ji, CFO of Huawei Northern Africa
Technology is dramatically changing the world of finance at a breakneck pace and Africa is leading the way. Today, this represents a unique opportunity, both in terms of business and social development. Mobile payment solutions are no exception to this generalization. Throughout the current pandemic, the African continent has seen its mobile phone operators intensify their digital banking projects, bringing in big opportunities together with a lot of challenges.
Since the launch of M-Pesa in Kenya in 2007, the mobile money transfer service, mobile money has since spread across Africa, with 80% of the continent covered by such services according to the GSMA report. Among the top 5 most successful mobile Money service players in Africa, 4 businesses have selected Huawei as their partner, especially Safaricom in Kenya and M-Ppesa in Tanzania. Huawei has notably helped Safaricom migrate its platform from Germany to Africa, with its business growing at a rate of 30% every year. This innovative service now serves multiple other functions, from money transfers to the payment of electricity bills and the purchase of telephone credit. This model is a success because it is so easy to use (very similar to sending SMS messages) and compatible with the vast majority of phones in circulation in Africa. To keep it a success, and fFor people with limited means, mobile money must represent convenience and security. Indeed, the mMobile mMoney system involves customer funds and is vulnerable to various attacks. Carriers need to consider service security from end to end. For example, compliance with security specifications such as PCI PA-DSS and GDPR must be evaluated by security organizations, thereby providing a traceable, secure wallet management solution with lower prices than those charged by banks.
This being said, hHow can the greatest possible number of people benefit from this dynamic? And can this new trend lead to greater integration of African women into the continent’s economic and social models? According We learned thanks to a report by the Cherie Blair Foundation that, 83% of women have seen their incomes increase when they have equipped themselves with a mobile phone that allows them to access the market. It is therefore essential not to put women’s status in second place in the development of mobile payment because their economic inclusion has a global impact on countries’ growth and poverty reduction.
This transformation towards a mobile money system is part of a 5-year perspective: 4 steps can be identified for governments in Africa to obtain a better environment, especially relating to the need to cooperate with private actors. New regulations must be implemented, involving more players to have a broader and clearer vision of what needs to be done in the future. In terms of licence deliveries, the States must push banks to cooperate with the Ffintech sector. Then, the mobile network should be improved in order to bridge the gap between mobile use in Africa compared toand other countries and regions. This ambition rests on the fact that the number of mobile money users is 20 million and the compound annual growth rate is 27%. According to this trend, the number of users is expected to exceed 50 million by 2025. Eventually, the States must foster the widespread acceptation of the population towards mobile money. In Africa, only 22% of people have their own bank accounts, while more than 80% use mobile phones. The mMobile mMoney service thus obviously has great potential in Africa. Due to the influence of COVID- 19, more and more people choose the cashless transaction mode, which helps to stem the spread of the virus by limiting contact with cash, and further accelerates the popularization of the mMobile mMoney service, leading the level of acceptation to be higher than what is expected.
In the face of this promising picture, it is important to keep in mind the obstacles that stand in the way of the large-scale development of this solution. While banks can automatically obtain certificates in order to carry out mobile money issuing activities, the same cannot be said for mobile operators, who still too often have to resort to partnerships with large financial institutions, a hindrance to the democratization of the mobile money market.
Moreover, some regulators remain wary of mobile payment, which explains why, faced with banking revenue pools of US$70 billion in 2019 across sub-Saharan Africa, the continent’s major mobile operators earned less than US$3 billion from mobile financial services. Finally, there is a need to ensure that the quality of the mobile network is optimal, even in rural areas. Private and public operators thus have a greater responsibility in the quality of the network infrastructure put in place.
If the breakthrough of mobile payment is achieved in the coming years, the rate of access to financial services will enable more than 300 million sub-Saharans over the age of 15 with a monthly salary to have a stable financial solution, and women to benefit from better living conditions. The hopes placed in mobile money are therefore considerable, and must under no circumstances be disappointed.