Africa has the second largest population after Asia, but, more importantly, it has favorable demographics compared to the aging demographic in Europe and Japan. Some two-thirds of the continent’s 1.3 billion people are under 24 years old and are a prime target market for digital financial services.
Many analysts now consider Africa the epicentre of the mobile money movement. In 2019, there were 481 million registered mobile money accounts in Africa, making up 46% of global accounts. This trend was expectedly accelerated by the COVID-19 pandemic, which saw multiple countries implementing a lockdown.
Kenya has been a success story in the mobile payment technology space, with companies like Mpesa offering mobile to mobile payments via SMS for more than a decade. About 200million consumers have subscribed for its mobile money services, and it processes 16 million transactions a day. The success of Mpesa highlights that African consumers are ready to embrace seamless cashless financial solutions.
Africa’s leading mobile operator MTN has partnered with payment platform Mastercard to add online payment functions to its mobile wallet for users across its fintech footprint. The South Africa-based company announced the partnership which could enable users of its MTN MoMo (mobile money) service to make online payments. Users of MoMo in all the 16 countries in Sub-Saharan Africa where MTN Money operates will be able to use a Mastercard virtual payment solution linked to their MoMo wallets, to “shop at well-known global e-commerce brands and pay quickly and securely for leisure shopping, travel, accommodation, entertainment, streaming services and more.” For owners of small businesses, the payment solution will enable them “to purchase from suppliers abroad”, the companies said in a press release. This is set to lead to significant gains in financial connectivity between Africans and the wider world.
Meanwhile, MFS Africa, a Pan-African fintech MFS Africa has recently announced that its payment solutions now reach over 320 million mobile money wallets, thereby facilitating large-scale compatibility between banks, telcos, money transfer operators, and other financial institutions in Africa through a single integration point. That’s impressive for a company that currently covers 60% of all mobile money wallets in the sub-Saharan African region.
It’s clear that the opportunities are there for the taking. However, businesses seeking to take advantage of the massive growth potential offered by the African financial services market have to understand regional intricacies. This is because each country has completely different socio-economic dynamics and regulatory regimes.
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