MasterCard’s Big Plans For Africa

MasterCard recently released the first African Cities Growth Index, as part of its continued investment in the continent. The Index looked at different social and economic indicators, to get a complete image of these growing cities. PYMNTS.com spoke with Michael Miebach, Regional President for the Middle East and Africa, to find out more.

How did the idea of the MasterCard African Cities Growth Index come about?

Africa’s population is expected to triple by 2050, with 60% of those people expected to be living in cities by that time. While this rapid growth in urban populations seems to be an immense opportunity, we felt that it is important to understand the diverse factors that are likely to impact the success of these urban areas in the future.

Prof George Angelopulo of the University of South Africa and a member of the MasterCard Africa Knowledge Forum compiled the research with his team. He identified 22 indicators that would together offer a holistic view of the recent history of the 19 cities chosen for the index, as well as providing insights into the next five years expectation.

This index is compiled from historic data and various economic and social indicators. This gives us, our customers and partners, and other investors interested in building businesses on the continent, a more comprehensive view into which cities offer the most opportunities, and which cities offer the most potential for growth.

What do the high scores for Accra, Lusaka and Luanda mean for these cities, and their countries, in terms of payments and innovation?

These cities achieved the top three positions on the Index because they scored well in the following indicators: gross domestic product per capita over the last three years, their projected population and household consumption growth, their strong regulatory environments and the relative ease of doing business in the cities.

These last two factors are particularly important to MasterCard, as we have seen the most successful innovations in electronic payments emerge in countries where the regulatory environment is receptive to innovation and change, and where citizens are actively encouraged to take part in the formal economic sector.

Africa is a great place for payments innovation right now, what do you think other regions have to learn from the African continent?

One of Africa’s most appealing factors is that we can adopt a green fields approach to product innovation – we don’t have to contend with legacy systems, and MasterCard can introduce new products and services to stakeholders who welcome them.

I think that developed regions could learn a little bravery from the African continent – bravery to try new things, to let go of the way that things have always been done, and to embrace the excitement of the way that things could be.

Do you think initiatives like the Nigeria Cashless Project have a future in the continent? And should they be extended to other countries in the region?

Our teams across the continent are engaging with governments in many African countries to work towards an Africa that is less dependent on cash. And with that to an Africa that is less impacted by the negative effects of cash on society and the economy: limiting access to the formal financial sector, security concerns, cost of cash, lack of transparency to name only a few.

The Central Bank of Nigeria is very proactive with their Cashless Nigeria Policy. MasterCard is partnering with all stakeholders in the country to make this approach a success. It goes without saying that governments across the continent are looking to gain insights and learnings from this initiative. MasterCard is committed to sharing such learnings and best practices around the globe and in the region.

A world beyond cash usually rhymes with financial inclusion for MasterCard. Can you explain the link, particularly in this region?

Through our engagements with stakeholders in the public and private sectors on the continent, we have seen that African governments are eager to maximize opportunities of investment and development. These stakeholders, whether government officials, financial institutions or business owners have acknowledged that to achieve the continent’s growth potential, its people need to have access to formal banking products and electronic payments.

MasterCard has always been passionate about creating a more financially inclusive Africa, and our World Beyond Cash strategy is aligned with the basic concepts of financial inclusion. Electronic payments, by their very nature, are more inclusive and support the move towards a cashless society.

MasterCard has been investing a lot in Africa lately, what can we expect in the coming months?

With five regional offices strategically located across the continent, an experienced and knowledgeable team on the ground and partnerships with governments, banks, merchants and regulators – MasterCard is positioned to take advantage of the opportunities in Africa, but also to provide the needed support to introduce innovation.

We have been operational in Africa for many years, but with the increased interest by stakeholders across the continent to adopt electronic payments we are witnessing much faster growth over the past two years.

During a recent visit by the MasterCard CEO and President, Ajay Banga, to Africa, we announced the partnership with Equity Bank in East Africa to introduce five million payment cards. Another exciting project still rolling out is the South African Social Security Agency (SASSA) Debit MasterCard, which is being rolled out to disburse social grants to more than 10 million vulnerable South Africans

These projects are just a snap shot of what is to follow in the months to come. With our partners eager to work with MasterCard we look forward to continuing our work in Africa.

Michael Miebach is president, Middle East and Africa for MasterCard Worldwide. Based in Dubai, Mr. Miebach is responsible for driving the evolution of payments and delivering increased value to MasterCard stakeholders in markets across the Middle East and Africa region.

Mr. Miebach joined MasterCard in 2010 from Barclays Bank PLC where he was the managing director for Middle East and North Africa, responsible for the bank’s corporate, commercial and consumer business in the region. Prior to Barclays, Mr. Miebach held several senior-level positions in Citibank.

With a wealth of experience in banking operations, Mr. Miebach lectures at various banking conferences and has co-authored banking related publications. He promotes community service and is a patron of the leading global student exchange organization, Youth for Understanding. Mr. Miebach is a director on the Middle East and North Africa board of INJAZ Al-Arab, focused on building youth entrepreneurial skills in the region.