Posts Tagged ‘cross border mobile financial services’

Will Cross Border Mobile Money Boost intra African Trade and Regional Integration?

cross border MMTOver the past 18 months, since I started tracking the spread of cross border mobile money payments across the African continent, there has been visible progress in leaps and bounds, as documented by the GSMA. In fact, back then, I’d written:

Top down reportage on banking and interoperability seems to focus only on the customer’s individual needs, and overlooks their agency as entrepreneurs, traders and business people.

The map above has been taken from the GSMA’s Mobile Economy 2015 report, and the 2016 report reproduces it as well. Now, the role of mobile money transfers in facilitating cross border and intra African trade is finally being recognized for its potential and cost savings. Author Ashly Hope lays out clearly the high cost of remitting money in the SADC region:

cost of remittance sadcSouth Africa and Tanzania are the largest sources of remittance, yet their transaction costs are significantly higher than the Sub Saharan average of 9.7% (which in turn is the most expensive region in the world where the average cost is now ~7.4%). And this is only one regional grouping.

It is when we look at the penetration of mobile money, that we see something that hints at the digital economy emerging in East Africa (birthplace of Mpesa in case you weren’t aware).

Given teh pace of change, we can safely assume that the figures given above have only increased since 2014. Tanzania’s mobile money market has been frequently cited for its growth and opportunity – it is also outstanding for the level of interoperability within the telco ecosystem.

In the previous article, we noted that Tanzania had just flagged off a Chinese funded regional logistics and trade hub which would include a local footprint for the distribution and sales of China made goods in the form of a warehouse.

“The trade hub will also help Tanzanians especially women to buy products here instead of travelling all the way to China, hence cutting costs down,” said Ms Janet Mbene, Deputy Minister of Industries & Trade.

Savings on travel and shipping is bound to translate into increased inventory purchases, and thus value and/or volume of goods traded. Taking the context of the entire East African Community’s “informal” cross border trade, and the visualization of the interconnections now provided by various mobile money transfer systems in the map above, one can safely start to forecast the potential gains to both traders, and the telcos, as the landscape of the local operating environment begins to change in response to infrastructure investments.

Whether this potential opportunity is exploited by the region’s traders, or overlooked and missed due to the existing digital divide, is the question that remains to be answered. The EAC’s mobile economy (~96% prepaid) needs to start thinking of itself as more than just telco led and impact hub driven, and get down to the ground at the fringes for the future.

Cross-border mobile financial services in Africa are going to be huge

africa_webAnalysis Mason has an excellent article on the next big thing in mobile money across the African continent – cross border payments. I covered the emergence of these services, through regional operators as well as partnerships based on interoperability earlier. This is what I asked for:

Mapping it all

I’d love it if someone could capture all of this into one map and infographic – not only the cross border transactional ability but also the cross border interoperability as well as in country interoperability. Like the Zambians, I think the potentials for business, trade, e-commerce and biashara are far more than anyone has even considered. Top down reportage on banking and interoperability seems to focus only on the customer’s individual needs, and overlooks their agency as entrepreneurs, traders and business people.

And this is what Analysis Mason’s article has to add:

Cross-border mobile money transfer services enable the informal sector to participate in the formal financial system and avoid opening a bank account, which typically requires more extensive documentation (for example, proof of residence) than registering with a mobile operator. Mobile money provides a safer, quicker, and often less expensive, alternative for cross-border money transfers.

Demand for cross-border remittances is also driven by regional integration, particularly in East and West Africa where regional agreements promote cross-border trade and monetary integration. Significant movement of African labour across borders, to seek higher wages and new employment opportunities (especially within regional ‘blocs’), also creates a mobile population, driving demand for mobile remittance services.

Given the dates of emergence of partnerships extending the reach of well known services such as Mpesa after the publication of this analysis, I suggest going with the data collated here first. On the other hand, they were the first to map it all so I’m surprised my earlier search didn’t turn up this article which shows an earlier publication date on the web page.

Connecting the Continent: Mobile Money across Africa

With much less fanfare than banking and accounts, a quieter revolution has been taking place on the electronic pathways connecting people in African regions. Historically competitive telcos are shaking hands and joining forces on mobile money. Interoperability has long been a dream and it is only now that we see things starting to take shape. Since the news has been dribbling out in bits and bobs over time, lets take a comprehensive look at the landscape of the operating environment and the connections being made across the continent.

social-media-listening-dashboard-5-638Safaricom, the progenitors of MPesa, the grandfather of all mobile money payment systems, isn’t actually a major telco on the continent. Its monopoly on mobile services is only in Kenya. However, when it comes to active mobile money users, its in the lead.

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http://www.gsma.com/mobilefordevelopment/annual-reports-show-mobile-money-remains-a-strategic-priority-for-mno-groups

This is the current state of the art of mobile money across the continent

mobilemoney

And here are some of the connections being made, with the most recent, first.

CDV_KdpWIAAiT23.jpg large

crossborderremitEACYou’ll note the significant leap that MPesa has made by going beyond its original agreement with Tanzania’s Vodacom – a Vodafone group company – by joining hands with MTN. Using the same colour coding for the graphic below, we see the flows in West Africa:

crossborderremitWaemuIn addition to these mapped intra African operator alliances, here are a few intra-operator mobile money alliances to note:

  • Three of Tanzania’s four mobile networks, Tigo, Airtel and Zantel  announced Africa’s first agreement to allow their customers in the country to send money to each other whether using Tigo Pesa, Airtel Money or EzyPesa on their mobile handsets.
  • M-Pesa Tanzania and Tigo Pesa Tanzania interoperable
  • Airtel subscribers could also begin cross border remittances of money on its platform sending and receiving money amongst other users in Rwanda, Democratic Republic of Congo (DRC) and Zambia.
  • The other countries that will be offering the Airtel Money service soon include Uganda, Kenya, Tanzania, Ghana, Burkina Faso, Niger, Nigeria.

That last is interesting, because the Zambians are asking the $64,000 question even as all eyes are on the media hoopla.

Our concern is that the other 2 countries, DRC and Rwanda, are not exactly the first options for trade by Zambia, but are some of the markets Airtel is in. If countries like Nigeria and Tanzania were the first to get access, we’d see so many transfers from here.

For now, we predict the transfers made will be more personal, to family/friends, than for trade purposes. If not, we would gladly appreciate any statistics on this from Airtel itself.

I don’t think the telcoms are even thinking about trade. The GSMA cross border report focuses on the remittance aspect, with the broadly unquestioned assumption that its all to family and friends.

Mapping it all

I’d love it if someone could capture all of this into one map and infographic – not only the cross border transactional ability but also the cross border interoperability as well as in country interoperability. Like the Zambians, I think the potentials for business, trade, e-commerce and biashara are far more than anyone has even considered. Top down reportage on banking and interoperability seems to focus only on the customer’s individual needs, and overlooks their agency as entrepreneurs, traders and business people.