Q&A: Africa’s mobile money ecosystem and its opportunities for startups

Ninety-nine percent of high school fees in the Ivory Coast (Côte d’Ivoire) in 2015-2016 were paid via mobile money, while M-KOPA and Fenix International have sold over 600 000 home solar power kits in East Africa via mobile phone as of April.

These are just two interesting insights provided by Gerry Rasugu (pictured above), GSMA’s mobile money market engagement director for Africa and the Middle East.

Rasugu spoke to Ventureburn following a report that the international mobile operator association released earlier this month.

More innovation in mobile money is taking place in those markets with enabling regulatory frameworks

Ventureburn: To what extent would you say the growth of mobile money services in Sub-Saharan Africa is being driven by local innovations and startups compared to foreign companies and established industry players?

Gerry Rasugu: Global mobile money adoption has been driven by growth in Sub-Saharan Africa, led by African providers such as Safaricom, MTN and Econet among others. The products and services that have so far driven mobile money (such as P2P transfers) are demand driven.

Additional mobile money-related products, such as the MShwari credit service, the M-Akiba bond issue and Lipa na M-Pesa (all of Kenya), are all local innovations.

VB: What insights do you have on how startups are taking advantage of the growth of mobile money services in Sub-Saharan Africa?

GR: Mobile money has helped to integrate informal economic activity in to the formal sector, creating more efficiency, transparency, and increased productivity.

While initial mobile money success was underpinned by P2P transfers and airtime top-ups, there has been a rise in the use of a broader range of ecosystem use cases such as: bill payments, bulk payments, merchant payments and international remittances.

Bill payments, in particular, have facilitated a rise in person-to-government payments and have helped digitise the value chains of different industries. For instance, 99% of high school fees in Côte d’Ivoire (the Ivory Coast) in 2015-2016 were paid via mobile money; in East Africa, M-KOPA and Fenix International had sold over 600,000 home solar power kits by April 2017.

The growth of mobile money goes beyond additional use cases and can be used for better service provision for financially marginalised communities, particularly women and rural communities. Sub-Saharan Africa has the lowest gender gap (19.5%) of all emerging regions worldwide, while over 35 000 farmers in East African have been receiving support through the Connected Farmer Alliance as of October 2014.

Additionally, mobile money enabled insurance and credit services have also grown significantly. There are now 60 mobile money enabled insurance services spread across 17 countries in Sub-Saharan Africa, with around 10 million policies issued as of June 2016.

Sub-Saharan Africa is also home to 39 mobile credit providers in 11 countries, with M-Shwari in Kenya having disbursed $1.3-billion worth of loans as of June 2016.

VB: Which are these 17 countries listed in the report as having mobile money enabled insurance services?

GR: Burkina Faso, Cameroon, the Ivory Coast, Ghana, Kenya, Malawi, Mali, Namibia, Nigeria, Rwanda, Senegal, South Africa, Swaziland, Uganda, Zambia and Zimbabwe.

VB: What should African startups focus on in order to cause the greatest disruption or make the greatest impact through the mobile ecosystem?

GR: Over the past five years, most mobile money providers have successfully partnered with external organisations to provide everything from utility bill payments to humanitarian relief disbursements. They have done so in a bid to grow payments ecosystems and facilitate a transition from cash to digital payments, whether disbursements or collections.

However, third-party integration is not yet seamless, slowing the pace at which new product development can take place. In this respect, the industry is reaching an inflection point where harmonised application programme interface (APIs) and greater integration with national payments infrastructure stands to accelerate a new wave of growth and innovation.

Innovation in digital financial services has tended to occur more successfully in markets that have an enabling regulatory regime. While regulation development requires efforts on the part of a broad group of stakeholders, engaging with regulators to create a climate conducive for innovation is key.

VB: The report mentions 30 countries which GSMA says have enabling regulations in Sub-Saharan Africa, which are are these countries?

GR: Most countries in East, West and Southern Africa are considered to have enabling regulatory frameworks.

VB: What is GMSA doing to help startups who want to work within the mobile ecosystem in emerging markets like Africa?

GR: Through its Mobile for Development programme, the GSMA offers aspiring startups the opportunity to applying for funding grants through the GSMA Ecosystem Accelerator Innovation Fund and the Mobile for Development Utilities Innovation Fund. Additionally, the GSMA Mobile Money Programme runs hackathons that aim to raise awareness, demand and speed up the implementation of the harmonised mobile money industry API.

The second hackathon of its kind was held during the weekend of 7 and 8 July in Dar es Salaam, Tanzania, where 15 companies and developers in the financial services industry came together to test and build solutions for harmonised API use cases.

The winning team received two all-expenses paid tickets to attend Mobile World Congress 2018 in Barcelona, Spain – the headline event on the GSMA calendar.

Featured image: Gerry Rasugu, GSMA’s Mobile money market engagement director for Africa and the Middle East (Supplied)

Daniel Mpala


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