Innovations are enabling Africans (even those in rural areas) to move up the financial services value chain
Orange Money xxxxx (Image credit: Orange)
Fintech has proved a ‘game changer’ in sub-Saharan Africa by transforming service delivery, with greater efficiency. Recognising this, Fintech firms are courting foreign investors; last year, African tech startups raised investment worth US$334.5mn, with Nigeria, South Africa and Kenya being the principal recipients, according to African Startups Funding Report 2018.
Wide ranges of services are now accessible to millions at a fingertip, thanks to near-universal availability of mobile across SSA. Fintech providers are leveraging economies of density (i.e. large customer base) and reliable network to expand their portfolio of services, including remittances, insurance premiums (Lesotho), pension payments (Ghana), investing in Government securities (Kenya), or stock markets, paying utility bills and receiving wages, as well as buying goods and services online. Some providers even allow households to borrow electricity on monthly instalments, thus avoiding blackout.
Fintech has opened access to services beyond those offered by conventional banks and moneychangers. Orange Money offers Visa payment and withdrawal card in Botswana, Cameroon and Côte d’Ivoire. The latter and MTN Group have formed a joint venture, Mowali (mobile wallet interoperability), which facilitates interoperable payments across Africa.
UK-based SimbaPay delivers money via existing e-money wallet services in Ghana, Kenya, Nigeria and Uganda – using its SimbaPay app.The latter and MTN Group have formed a joint venture, Mowali (mobile wallet interoperability), which facilitates interoperable payments across Africa.
Recently, Safaricom has secured a deal with ‘AliExpress.com’ owned by Chinese e-commerce giant Alibaba Group. This will allow M-Pesa users to do online shopping on one of many Alibaba’s platforms. “The move especially targets microtraders in Kenya who source goods and other supplies from manufacturers in China,” Safaricom said in a press statement. “As our customers get more digital, they want to shop in a more digital kind of a format, that’s why we are seeing e-commerce growing,” said chief customer officer, Sylvia Mulinge. Also, Safaricom’s M-Shwari service offers access to savings accounts and instant micro-credit products.
South African payments firm, Wizzit provides micro-finance products to more than seven-million people in 13 SSA countries since its formation in 2004 in partnership with the World Bank Group. Its customers can obtain micro-loans via cellphones for either private or business use. Another South African micro-lender, GetBucks offers short-term personal loans and other financial services via the Internet and cellphones using a platform called FinCloud.
Zoona, Zambian-based mobile payments co. with a customer base of two million has processed more than US$2bn in transactions since it launched in 2009. It has built a distribution network of Zoona Agents in 10 countries (mostly in southern Africa) to convert electronic value to cash and vice versa, in high-traffic areas such as bus stations, markets and shopping centres. Zoona offers the service ‘Sunga Pockets’ where users can store money in an accessible electronic account.
Zoona has formed a partnership with non-profit making US-based Kiva Microfunds that allow people in rich world to lend money via the Internet to entrepreneurs in some 81 developing nations. The entrepreneurs are vetted by Kiva and over time the loans are repaid. Lenders (donors) have the option of keeping their money within the system to help more ‘start-ups’ or exit once they are satisfied with the borrower’s progress. Since 2005, Kiva has provided US$1.3bn in soft loans, with a repayment rate of 96.8-per cent (Kiva data).
Money mobile indicators for SSA (regional averages, 2017)
Accounts per 1,000 Adults: 245.
Mobile Money Outlets per 100,000 Adults: 210.
Transactions per 1,000 Adults: 16,500.
Transactions (per cent of GDP): 20.
Source: IMF Financial Access Survey
*Full report on Fintech will be published in African Review May 2019
by Moin Siddiqi, economist