Mobile Money - Afrikan Heroes

Growing Mobile Money in Africa Driven by Startup “Unicorns”

June 22, 2021

A new report shows that Africa’s growing adoption of mobile money is driven by the number of emerging “unicorns” in the continent. This is according to a recent GSMA report which reveals that there are 1.2 billion registered global mobile money accounts. 560-million of these registered accounts are in Africa. The GSMA, which represents several mobile network firms, states that “Sub-Saharan Africa has been at the forefront of the mobile money industry for over a decade, and in 2020 continued to account for the majority of growth.”

FinTech Unicorns Running Wild in Africa

Now, five African fintech startups, Flutterwave, ChipperCash, Interswitch, Paga and OPay are now being identified as “unicorns” by investors, the business media and analysts following the surge of mobile payments.

Flutterwave achieved a valuation of $1-billion in March 2021 after closing a funding round of $170-million. Meanwhile, Chipper Cash received an investment of $100-million in June 2021 from Jeff Bezos’ personal venture capital fund.

Interswitch, Paga and OPay also received recent investments that valued them at over $1-billion earning them the name of the mythical horned beast that is the moniker of such unusually large valuations.

Convenience, security and trust are fuelling the seismic wave of mobile transactions together with the pervasive penetration of affordable mobile feature phones on the continent. Cash used to be king in Africa but handling and banking money have become riskier, which is why traders, entrepreneurs and consumers alike are going mobile.

Analysts say that by 2025 the African mobile market is expected to have 850-million customers who drive waves of $2.5-trillion to $3-trillion in transaction volumes annually.

Affordable Smartphones Drive Growth

A key driver in the surge of mobile payments is the increasing affordability of mobile phones in Africa. A case in point is TECNO Mobile which is owned by TRANSSION and which knocked Korean giant Samsung off the top spot for handset sales in Africa in 2020.

Counterpoint Research’s Market Monitor reveals that itel, a TRANSSION Holdings brand, owns the top position in the global and African feature phone market. According to Counterpoint, itel commands 23% of the global phone shipments market share.

TRANSSION believes that by recognising the importance of keeping costs down with its latest devices and by understanding the need of Africa’s youth population to have access to affordable phones that offer the same features as higher-end flagship models, TRANSSION has seen itel receive significant acclaim. In South Africa, smartphone penetration reached 91.2% in 2019, up from 81.7% in 2018.

Mobile phones are an indispensable part of people’s lives. Research shows that most people spend about five hours on their mobiles daily.

Today people are using affordable smartphones to do their banking and move their money safely and affordably. Services like sending and receiving money, buying goods and services online, paying taxes and school fees, buying airtime, taking out loans and even starting and running businesses (or running an e-commerce operation from social media like Facebook and Instagram) are all simplified through a connected mobile device.

Safety First

Cybercrime continues to boom in Africa, and worldwide. Now more than ever should users banking or moving money online keep safety at the forefront of their minds. With this, itel counsels new financial transactors to always be secure and safe. The company offers the following advice:

Only use a trusted mobile payment brand. itel suggests that you work with Flutterwave, ChipperCash, Interswitch, Paga or OPay because these mobile payment services are easy to use, secure, fast, and offer transparent pricing.

When you set up your preferred app, ensure you use the fingerprint, code or pin to protect yourself and your money should your smartphone ever get stolen. Always use two-step authentication, and biometrics if possible. Use the security features on your phone to protect yourself and to protect your money.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

More Than $1bn Sent Via Mobile Money Every Month — GSMA Report

March 28, 2021

The GSM Association (GSMA) has released a report on the state of mobile money industry. Tagged “State of the Industry Report on Mobile Money”, the report unveiled a major piece of information: for the first time, more than a billion dollars were sent and received internationally around the world every month via mobile money.

The report indicates that mobile transactions accelerated during lockdowns induced by Covid-19 around the world. This is because all the restrictions limited access to cash and financial institutions. In addition, the number of registered accounts increased by 13% in 2020 to reach more than 1.2 billion, double the forecast.

They were not very optimistic because the consequences of the pandemic (job losses, income cuts, etc.) suggested that transactions were going to decline. This was without counting on the diasporas who have instead redoubled their efforts to support their loved ones. As a result, the total value of transactions increased 65% to an annual total of $ 12.7 billion in 2020.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Africa’s Cheapest Mobile Data Country, Somalia, Issues First Ever Mobile Money License

March 6, 2021

Somalia is one of Africa’s poorest countries by World Bank standards, with GDP per capita of about $500, but there are some ways it is better than the rest of Africa. Apart from having the cheapest mobile data rate in Africa (US$0.50 for one gigabytes; or just ₦190 if you’re in Nigeria), the east African country has gone ahead to issue its first ever mobile money license to a private company, even ahead of its neighbour Ethiopia, which is seven times bigger than it in population.

PRESS STATEMENT pic.twitter.com/IwmYR5EZch
— Central Bank of Somalia (@CBSsomalia) February 28, 2021

However, granting the mobile money license does not mean that mobile money operations have not been going on in the country. For every month in the year 2018, the country recorded approximately 155 million mobile money transactions, worth $2.7 billion. Similar transactions have also been going on in the country for the past 10 years.

What the Central Bank of Somalia had merely done was to issue the country’s first ever money license to an entity, thereby ending the era of unregulated mobile money services in the country.

The license went to Hormuud Telecom, the country’s largest telecommunications provider, which runs the Electronic Voucher Card (EVCPlus) free mobile money service.

Mobile Money Somalia — *Mobile Money statistics in 2019 for sub-Saharan Africa. Source: GSMA*

Hormuud Telecom Sticks Out Of The Competition

CBS’ license to Hormuud Telecom is a major achievement for the telecom company as it helps it to partially heave some sighs of relief from the country’s crowded telecoms market, currently made up of 11 licensed local operators.

Although Hormuud’s new license may not make much difference as there are already numerous unregulated services in operations, it may however help the telco to position itself early for post-regulation market share.

According to the World Bank 2017 report, mobile money service in Somalia has reached a penetration rate of 73% (83% in urban areas), compared to a penetration rate of 15% for formal bank accounts. Somalia’s Dahabshiil is one of the largest money transfer companies in Africa, operating in 155 countries.

Majority of Somalian households (58%) make one to four transactions each month and tend to use mobile money over cash for purchases between US$2 and $300. A mobile money account must be linked to a bank account for transactions over $300. As a result, digital money is an excellent cash replacement, and it can be used for everyday transactions such as bill payments, paycheck receipts, and merchant transactions. Nevertheless, a study by Hormuud Telecom revealed that cash-out rates on mobile money platforms in Somalia are less than 5%, indicating a greater number desires to keep money in mobile wallets rather than cash it out.

In contrast to Kenya’s well-known Mpesa mobile money transfer service, Somalia’s transactions are mostly in US dollars. Though mobile money providers are mobile network operators, they are increasingly becoming part of large conglomerates that also provide banking and money transfer services, as in Kenya.

Generally, the East African region has a booming mobile money market. As of 2019, the total value of mobile money transactions reached $17 billion in Kenya, $12 billion in Tanzania and $5.9 billion in Uganda.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Rwanda’s Mobile Payment Transactions Grow By 206%

February 24, 2021

Buoyed by the lockdown, the value of mobile payment volumes in Rwanda increased by 206 per cent in 2020 to Rwf 7.177 billion from Rwf2.349 billion in the previous year, statistics from the central bank show. Mobile payment transactions increased by 85 percent from 378.8 million transactions in 2019 to 701 million transactions.

In 2020, Mobile points of sale (POS) increased significantly to 39,743, excluding the acceptance points provided by motorcycle taxi riders from 13,675 in 2019 with transactions value growing by 1,514 per cent in value from Rwf 52 billion to Rwf846 billion. The growth across the channels was largely driven by the pandemic and measures to curb it which included promotion of digital payments as customers and merchants sought safe means of payment to prevent the spread of the virus.

Going forward, to sustain the growth trends in mobile money payments and transactions the Central Bank has called on service providers to ensure continued merchant on-boarding across the country across all sectors as well as ensuring the availability and reliability of systems to build and maintain customer trust.

According to Peace Uwase, the Director-General of the Financial Stability at the Central Bank of Rwanda, building on the progress made should also be characterized by enhanced security to ensure customers are not being defrauded as well as timely resolution of customer complaints and expedited refunds where necessary. Further considerations that will facilitate building on progress made include pricing to ensure that it is affordable and also in line the national cashless agenda.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

East Africa is Global Leader of Mobile Money – Report

The East African region has cemented its position in the digital economy as the global leader with the highest penetration rate of mobile money in the world. The region has 1,106 registered mobile money accounts for every 1,000 adults, compared to 600 for the whole of Africa, 533 for Asia and 245 for Latin America and the Caribbean. In East Africa, penetration is higher with most adult subscribers owning one or more mobile money accounts.

According to data from a 2021 joint report titled: Africa’s Development Dynamics’ authored by the African Union (AU) in collaboration with the Organisation for Economic Cooperation and Development which indicates that East African member states such as Uganda, Kenya, Rwanda and Tanzania lead the world in mobile money transactions, mostly because policy makers and regulators took an earlier risk to invest in innovation, which has made the financial sector more inclusive. Other countries in the region, including Comoros, Ethiopia, Mauritius, Seychelles, Somalia and South Sudan, have also launched or are in the process of launching mobile money services.

Mobile money penetration has also been a key enabler and driver of digital innovation and adoption, leading to a boost in productivity in key sectors as well as creating jobs in the digital economy with financial technology (Fintech) startups in the region operating in a wide range of domains such as education, healthcare, consumer services and agriculture.

Fintechs have developed applications that help address rural urban supply chains and market linkages through electronic retail payment systems thus reducing fraud and enabling e-commerce growth. In Kenya alone, the spread of mobile money services has helped raise at least 194,000 households out of extreme poverty and has also enabled 185,000 women to switch from subsistence agriculture to small businesses or retail as their main occupations.

The report also notes that whereas East African governments can facilitate and regulate cross border payments, especially for mobile money accounts, currently, no interoperable mobile payment system covers the region, and the cost of creating one remains high.

In Uganda, according to data from Bank of Uganda, the value of mobile money transactions grew to an all-time high in December, capping the year at 28.2 per cent in 2020 compared to 2019.The number of mobile money transactions, the report noted, grew by 25 per cent during the same period. The Central Bank noted mobile money transactions grew to 3.5 billion in 2020 compared to 2.8 billion in 2019. Value of transactions rose to Sh93.7 trillion in 2020 compared to Shs73 trillion in 2019.

In Uganda, 2020 saw transactions grow to double digits month-on-month having recorded Shs10.3 trillion in value of transactions in December. Deposits and withdrawals equally grew to Shs2.5 trillion month-on-month from an average of Shs1.5 trillion in 2019. The growth could be partly explained by the increase in subscriber numbers, which during December 2020, grew from 23.5 million to 30.5 million subscribers.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Central Bank of Kenya Gives Mobile Money Operators Year End to Stop Waivers

December 21, 2020

Central Bank of Kenya (CBK) Governor, Patrick Njuroge

The emergency waivers for mobile money transactions given to operators in Kenya for mobile money operators by the Central Bank of Kenya will expire on December 31, 2020. The apex bank said the measures established on March 16st 2020, to encourage mobile money transfer over cash transactions in response to COVID-19 will end, following consultations with Payment Service Providers. To this end, from January 1 2021, PSPs will end the charges waiver for transactions below KSh 1000, replacing it with zero rated fees for transactions below Ksh 100. However, waivers for transfers between mobile money wallets and bank accounts will remain.

Additionally, CBK will oversee charges between Savings and Credit Societies (SACCOs) and mobile money platforms in an attempt to integrate the societies with mobile money. Payment Service Providers will also offer revised pricing structures pegged on choice, efficiency, transparency, affordability, and customer-centricity, among other tenets. Safaricom announced that it is considering reducing its transaction costs over time.

The waivers boosted mobile money usage and brought in new users to the services. CBK says the monthly volume of person to person transactions increased by 87% between February and October 2020. Similarly, the volume of transactions below Ksh 1000 hiked by 114%. Mobile money also recorded 2.8 million new users over the period. Nevertheless, service providers bore the brunt, forfeiting fees, and commissions for the transactions. For instance, M-Pesa revenue declined by 14.5% year on year, following the waivers in response to COVID-19.

“The adverse service revenue performance is mainly attributed to the decline in M-PESA and voice revenues. Zero-rating of M-PESA transactions impacted M-PESA revenue which declined 14.5% year-on-year,” said Michael Joseph, Chairman of Safaricom Plc Board of Directors.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Central Bank of Kenya Ends Free Mobile Money Transfers From January 1, 2021

December 20, 2020

The Central Bank of Kenya has put an end to the era of free mobile-money transfers below Ksh.1000 ($9) with effect from January 1, 2021. According to CBN, the measure will not be extended anymore. The implication of this is that customers will be required to now pay transaction fees for transfers below Ksh.1000, but not below Ksh.100. Additionally, mobile money-to-bank transactions are equally set to be free. In March this year, the CBK waived fees for mobile money transactions of up to Ksh.1000. This saw several digital transactions record their best year yet.

What Does The New Rule State?

The statement from the Central Bank of Kenya reads as follows:

“CBK has reassessed the emergency measures with the objective of consolidating the gains made so far and also facilitate a transition towards sustainable growth of the mobile money ecosystem. Following consultations with Payment Service Providers (PSPs), CBK will allow the emergency measures to expire on December 31, 2020, and PSPs will introduce revised pricing structures from January 1, 2021, with the following elements:

There will be no charge for person-to-person transfers of up to Ksh.100 to any customer and network.
There will be no charges for transfers between mobile money wallets and bank accounts.
To facilitate the integration of Savings and Credit Societies (SACCOs) with the mobile money ecosystem, SACCOs regulated by the Sacco Societies Regulatory Authority (SASRA) may levy a charge for transfers between SACCO accounts and mobile money wallets. CBK will oversee these charges in the context of the products that banks and PSPs offer to SACCOs.
Going forward, PSPs will propose pricing structures that reflect the “Pricing Principles” that CBK has introduced. These “Principles” aim to support the development of an efficient, safe, and stable payments and mobile money ecosystem where the customer and public interests are adequately protected. It is noted that the wallet and transaction limits that were announced on March 16, 2020, will remain in force as was communicated earlier. CBK will continue to monitor developments in the payments ecosystem and take any necessary actions.”

*More than half of the mobile money accounts in sub-saharan Africa are in the MPesa-dominated East Africa. Source: GSMA*

Central bank kenya mobile money Central bank kenya mobile money

What Does This Mean For Fintech Startups In Kenya?

The new rule will affect fintech startups in Kenya, particularly those into mobile money operations.

“The values transacted during the period increased significantly from the previous quarter following the Governments directive on the use of cashless payment systems to curb the spread of COVID-19,” noted the Communications Authority of Kenya.

The end of the waiver, noted Genghis Capital Equities Analyst Gerald Muriuki, would therefore mean that Kenya will not see the same volume and value in the transaction when the accompanying costs return.

“In the short-term, we may not see the volumes we have been seeing thus year, but in the longer term, there exists a case for more cashless transactions,” he said.

“The future will feature a more cashless environment as seen in the emergence of new digital currencies.”

According to CBK, mobile money subscriptions in Kenya stood at 64 million in September, 2020. This is against a lower sum of 59.4 million in April, 2020 while the number of transactions hit 163.3 million from 125 million within the same period.

The value of mobile transactions as of September meanwhile touched a high of Ksh.483.2 billion from a low Ksh.308 billion in April.

Additional the number of mobile-money agents expanded to 263,200 from 242,275.

According to data from the Communications Authority (CA) covering the period between April and June, all mobile-money transfer values including person to person, and customer to business grew on the back of the fees waiver.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Mobile Money Platforms Allowed To Engage In Gambling Transactions In Kenya

October 20, 2020

In a landmark move, Kenya’s National Assembly Sports, Culture and Tourism committee has overturned a provision in the Gaming Bill of 2019 which sought to block gamblers and betting companies from receiving cash or paying through mobile money platforms such as M-PESA, Airtel Money or T-Kash.

“The amendment seeks to discourage gambling and to deter a licensee from allowing illegal gaming,” the committee said in a report. “The amendment seeks to remove the use of credit cards to gamble or bet…and seeks to provide for other modes of payments which a player may use, that is mobile money transfer.”

Here Is What You Need To Know

The bill which seeks to repeal the Betting, Lotteries and Gaming Act of 1966 was introduced to police the betting industry which has seen massive growth over the last couple of years.
The biggest winners following this reversal are telcos and betting firms while the biggest losers are banks affected by the removal of the use of credit cards to bet.

*African online gambling market share. Source: European Gaming and Betting Association*

Gambling Kenya Gambling Kenya

Under Section 60 of the Bill, online gamblers are not to bet anything less than KES 100 on any competition. The initial limit used to be KES 50, a big business opportunity for betting companies.
This boost is mostly associated with the fact that the lawmakers raised the minimum amount of an online gambling bet to KES 100 ($0.92).
This proposal would sound familiar to the British as it mirrors a similar decision made by the UK’s Gambling Commission earlier this year.
According to GeoPoll, 88% of gamblers in Kenya have once used their phone to place bets. Out of the 88%, 55% are gambling on their phone once a week or more. The report also goes ahead to show that 83% bet on football the most.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

All Mobile Money Transactions Under $9 Remain Free— Central Bank of Kenya

June 26, 2020

The Central Bank of Kenya (CBK) has extended the waiver on mobile money transactions fees under Sh1,000 ($9.4) for another six months after the initial 90-day period lapsed, a move that could see Safaricom, the largest telecommunications provider in Kenya, lose up to Sh15.3 billion, according to the company.

“CBK has determined that the wallet and transactions limit…will remain in place from July 1 until December 31, 2020,” the regulator said in a statement.
“More than 1.6 million additional customers are now using mobile money channels. However, business-related transactions have declined marginally,” added the CBK. Earlier data from the regulator showed that the daily average mobile phone money transactions of less than Sh1,000 grew by 83 percent to Sh1.98 billion daily between April 20 and May 10 when compared to the days before March 16 — just four days after Kenya announced its first positive Covid-19 case.

Here Is What You Need To Know

The banking sector regulator said that the free service aimed at cutting down on the handling of cash and the attendant risk of Covid-19 being transmitted from person to person will run to the end of December. The order will also affect commercial banks, which had on March 16 removed charges for customers moving money between their mobile wallets and bank accounts.

*Africa is leading mobile money operations in the world. See Source*

Safaricom had earlier said that the free M-Pesa service had seen it lose an average of Sh1.8 billion monthly since mid-March, a pointer that it could miss sales of up to Sh16.2 billion in the nine months to December.
The Sh16.2 billion is equivalent to about a fifth or 19.1 percent of M-Pesa’s annual sales, underlining the impact of the pandemic on Safaricom’s earnings.
CBK said that the free service has increased low value mobile phone transactions, which account for 80 percent of all mobile money transfers.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.

Kenya’s Largest Teleco Safaricom Is Introducing A New Mobile Money Savings Service

December 6, 2019

If Safaricom, Kenya’s largest telecommunication operator, fully implements its latest innovation, then banks in Kenya are in for a serious battle. Safaricom is testing a new mobile savings service that will enable Kenyans to save much of their money online, off banks. Simply put, banks may still be the slave collecting physical deposits while Safaricom would be swallowing the deposits. Its implication is that if it scales, Kenyans may pour all their savings into it for fixed and attractive interests, thereby shunning banks which do not often give out any interests for savings.

Lisa Kimathi, an investment analyst at Standard Investment Bank

“If it comes on board, it will be a game changer to the ordinary Kenyan. It should do well for their returns,” said Lisa Kimathi, an investment analyst at Standard Investment Bank.

Here Is All You Need To Know

Kenya’s leading telecoms operator Safaricom SCOM.NR said it was testing a new mobile savings service, dubbed “Mali” (Kiswahili for wealth), in a bid to broaden Safaricom’s successful M-Pesa mobile money platform.
Mali, which will be capped at 70,000 shillings ($690) per saver, will offer an interest rate of 10% per year, higher than that offered by commercial banks, the Business Daily newspaper reported.
Safaricom confirmed it was testing a savings product called Mali, but did not comment on the other details in the newspaper report.
Policymakers say the East African nation suffers from a low national savings rate and analysts said Safaricom could be looking to target that untapped market with the new product,

Safaricom Already Has One of East Africa’s Biggest Mobile Money Platforms— M-Pesa

M-Pesa, which allows users to send and receive cash, and pay for goods and services even on basic feature phones, has powered Safaricom’s earnings in recent years.

The active user base of M–Pesa has grown from approximately 1 million active users in 2007 to 33.4 million active users in 2018. This amounts to 37% in compounded annual growth rate.

During the company’s first half to the end of September, M-Pesa revenues grew by 18% to 41.97 billion shillings, with the number of users standing at 23.6 million.

Safaricom, part owned by Vodacom VODJ.J and Britain’s Vodafone VOD.L, already runs an overdraft facility on M-Pesa called Fuliza and it has savings services in conjunction with two banks — KCB Group KCB.NR and NCBA Group NCBA.NR, which offer lower interest rates to depositors.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world