What’s next? The New Wave of Innovations in Africa’s Mobile Financial Services

We are very excited to be launching our new monthly OnFrontiers Webinar Series. Kicking off this series is our webinar on;

What’s next? The New Wave of Innovations in Africa’s Mobile Financial Services

OnFrontiers spoke with our moderator for the webinar, Charles Niehaus, Managing Director, Circle Payments, about why this topic is especially pertinent today.

What do we mean by ‘mobile money’?

The term ‘mobile money’ gets thrown around a lot, so it’s important to define what we mean by it in the context of frontier markets. What we mean by ‘mobile money’ in that setting is not about innovations like Apple Pay, mobile phone card reader services like Square, or mobile in-app purchases. It’s about creating workable financial services to work at the bottom of the pyramid where traditional banking did not reach before. By digitizing what used to be a cash environment a brand new space is created.

Why is it important?

Banking penetration in most Sub-Saharan African countries is around 15-20% as it has traditionally not been profitable to provide banking services to other parts of the population. This means that there is massive potential for innovation to create viable financial services solutions for large swaths of the population. As mobile phone penetration rates are high across Sub-Saharan Africa, particularly involving devices with prepaid SIM-cards, a central question has been how to transform them into “mobile wallets”.

Initially, mobile finance technology presented itself as an alternative for people wanting to transfer money, for example from an urban to a rural area, who used to do so through various methods like taxi drivers or other forms. It’s come a long way since then and a new structure has emerged now that digital cash is an established phenomena. More and more products are being developed; in countries like Tanzania and Kenya, mobile network operators (MNO) have started offering both savings and credit products – in West Africa, insurance products as well. Merchant payments is one of the next, and crucial, steps – how to create a solution where you can buy a soda in the corner shop.

Why now?

It’s an exciting moment to follow mobile financial technology in Sub-Saharan Africa as the “bottom-of-the-pyramid” is increasingly being banked, paving the way for financial inclusion. Importantly, as this is a new space, these processes are not a story of disruption but rather one of digitization making banking profitable at a wholly different scale than ever seen before.

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About the OnFrontiers Expert consulted for this article

Charles Niehaus is a consultant in Payments and Mobile Money across the Africa region. Prior to this he was General Manager for Visa in sub-Saharan Africa and was responsible for Visa’s business across 25 African markets. Charles has been involved within the payments industry across Africa for over 15 years. To speak with Keith or similar experts reach out to hello@onfroniers.com.

About OnFrontiers

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Founded in 2014, OnFrontiers is a global advisory network and research firm that provides rapid access to targeted, high quality insights in hard to reach frontier markets.