While carriers in the west fight for a significant role in the mobile commerce value chain, it’s a very different story in Africa, where economic growth and the sizeable base of ‘unbanked’ users are creating a boom in handset-based payments. Vodafone has been a pioneer with its M-Pesa, which is gradually expanding from its initial territory in Kenya to other parts of Africa and to India. Now Bharti Airtel, India’s own leading cellco, and a key Vodafone rival in emerging economies, has partnered with pan-African banking group Ecobank to offer mobile money services across nine countries.
The Airtel Money services will be rolled out this month in Burkina Faso, Chad, Democratic Republic of Congo, Ghana, Niger, Zambia, Kenya, Gabon and Sierra Leone. This will be a significant challenge to M-Pesa, though it has been slow to materialize ‘ Bharti originally signed a memorandum of understanding with Ecobank, to bring the services to 14 of its 17 African operations, back in June 2011. They are targeting the markets where their existing footprint overlaps (Ecobank is active in 30 countries).
Despite the high pent-up demand, there are still hurdles in the way of mass market uptake of mobile money services, including regulatory barriers and the difficulty of marketing to the unbanked population. Just last week, Bharti’s director of regulatory affairs in Nigeria, Osondu Nwokoro, listed several reasons for limited adoption of mobile payments, three years after the country issued mobile money licences ‘ even if the low starting point makes the growth curve look attractive nonetheless. He said regulators in Nigeria and some other countries had limited the role telcos could play in implementing handset-based money services, and also blamed lack of finance, inconsistent technical specifications, low public awareness a shortage of agents.
Vodafone and Bharti will both be vying to change that situation. Subject to regulatory approval in each market, the latter’s customers will now be able Airtel Money deposits and withdrawals at Ecobank branches. They will also gain the ability to pay utility bills, make two-way money transfers between Airtel Money and Ecobank accounts and to check account balances.
‘Ecobank is committed to bringing financial services to all Africans including the unbanked and under-banked through collaboration with major partner telcos like Airtel,’ said Patrick Akinwuntan, Ecobank’s group executive director. Bharti entered Africa in 2010 when it acquired Zains’ mobile units in 15 markets for $9bn.
Meanwhile, in the past two weeks, Vodafone has announced the expansion of M-Pesa to additional Indian markets in Uttah Pradesh, and to its latest African market, Lesotho. It says it is learning lessons from each roll-out, so that successive deployments are more problem-free. Its approach is to build up critical mass based on simple payments services and then build value by encouraging the customers to adopt further transactions options. Vodafone agrees with Airtel Nigeria that the market is difficult in west Africa, but is more upbeat about the eastern region, having seen rapid uptake in Kenya, Tanzania and Uganda.
Lesotho, which is one of Africa’s poorest countries, is the fifth roll-out under the auspices of its South Africa-based joint venture Vodacom. Vodacom already runs M-Pesa services in South Africa, Tanzania, DRC and Mozambique. In Kenya, Vodafone has a separate venture, Safaricom.
Vodafone has said M-Pesa is its biggest source of revenue growth in Kenya, and that about 30% of Tanzanian GDP now flows through M-Pesa.
In Lesotho, it is already seeing higher growth than in South Africa, which entirely surrounds the landlocked state, but has a far richer economy with a complex competitive landscape in both telecoms and banking. Ian Ferrao, managing director of Vodacom Lesotho, said that, since a soft launch three months ago, M-Pesa has signed up 13% of the population, or 260,000 users, and is seeing transactions grow at 60% a month. The secret has been to allow users to do more than just carry out peer-to-peer cash transactions, but also pay electricity or pay-TV bills, shift money between bank accounts and M-Pesa, and get ATM withdrawals. “We didn’t just focus on cash transactions but also highlighted buying airtime via M-Pesa. We reinforced this message by running an aggressive promotion giving 30% more airtime if you bought using M-Pesa,’ Ferrao said in an interview with AllAfrica.