By 
The African mobile money industry is relatively young. It started off as a telco (Vodafone) noticing its customers using airtime as a means of exchange and created a solution – Mpesa. Mpesa was a new opportunity to facilitate payments for their users on the continent.13 years later, it’s an industry with year on year growth and many players across the continent; a huge success story.
However, the most prominent use case for mobile money and online transactions are peer-to-peer payments. My experience with Orange shows there is leverage for mobile money to become more than peer to peer payments.
To understand what financial services or products we should be designing for, it is important to answer the question, “what is money used for?”. The framework for thinking of the legal use of money in general is: earn, receive or borrow it, spend it, save it (in order to invest it) and give it (another form of investment). I think of the end goal of financial technology particularly mobile money as to seamlessly cover all these different spheres for a particular customer. This can end up looking different based on customer segmentation.
Looking at the mobile money ecosystem across the continent, we’re still very much at the earning and receiving stage with some emerging momentum of spending and borrowing; the first generation of digital financial services. Transferring money from point A to point B is still a big part of our business. We’re still focused on helping customers make peer-to-peer payment in a safer and more efficient way. The percentage of business operations focused on peer-to-peer payments varies across different companies but is largely over 50%. Beyond peer-to-peer payments, the next line of business is still bill and merchant payments. So, there’s still a lot more to do on the continent with regards to mobile money, very much a nascent industry.
Ultimately, living our financial lives through our phones will dominate the African economies and digital flows will be the way of life. To achieve this, we have to look at more user-friendly ways for people to interface with technology. For instance, we have a large semi-literate population and many of the current solutions via USSD involve a lot of typing which can be error-prone and not customer-friendly.
The second generation of mobile money is trying to answer the question: “how do you save, borrow and invest?” There are existing solutions that allow people on the continent to save on an individual level but we need more.
At Orange, there have been experiments in recent years with microloans with the latest being the launch of the first product from Orange Bank Africa this past July. Africa has one of the highest rates of entrepreneurs in the world. A close examination of that data will show that micro-entrepreneurship contributes a huge number to that. These small businesses are cash-intensive and cash-flow sensitive and in some cases require daily financing to keep operating. What’s the way forward?
Designing and offering financial products directed at these small-scale entrepreneurs is the holy grail. Following observable trends from China, innovation coupled with bank partnerships and the evolution of government regulations will possibly birth micro-financial services at scale. This is very much needed on the continent and can deepen financial inclusion and ultimately financial sovereignty, as I prefer to describe it.
More critically, this is vital for women as historically, they have been left out of fair economic opportunities even in the face of Africa having the highest rate of female entrepreneurship in the world. It will move the needle of economic and social goals thereby creating a life cycle where micro-businesses can grow and move into the formal economy. Also, the classic case study that is Grameen Bank in Bangladesh has long proven that lending to women has proven to result in a compound-interest effect across generations. Building a full suite of digital and inclusive financial services can change the trajectory of life for individuals and overtime of nations and is, therefore, an investment in the future that should not be delayed.
Comments