Mobile payments in sub-Saharan Africa will generate $1.5 billion in fees for mobile-money providers by 2019, according to a report by the Boston Consulting Group.
The growth comes from a combination of a largely unbanked population and high mobile phone penetration. That has turned the southern half of the continent into a giant test of mobile money’s potential, and the region has the world’s highest proportion of active financial-services accounts, at 43 percent.
But with the exception of M-Pesa, Kenya’s breakout success in the mobile payments business, mobile-money startups are in a race with conventional banks and mobile operators to capture customers, according to the report, “Africa Blazes a Trail in Mobile Money.” The report adds that sub-Saharan Africans are now open to other financial services delivered via their phones, including loans and insurance.
More than 460 million people in the region will be above age 15 with an annual income of at least $500, with 400 million of them mobile-phone subscribers, but only 150 million will be traditional bank customers. That leaves 250 million as the market for mobile financial services.
But the market may not end there. “Even traditionally banked Africans [may] increasingly turn to the simpler and cheaper mobile offerings,” said Michael Seeberg, one of the authors of the report. To counter that threat, banks and mobile operators will have to invest in a network of agents where customers can sign up and make deposits and withdrawals — in effect, micro-branches — as well as identify and roll out the financial services that will appeal most to mobile-based customers.
But while banks are faced with the challenge of putting agents in places where the banks were never willing to put branches before, mobile-money startups have a success model in M-Pesa, which was launched in Kenya in 2007. By 2014, mobile payments penetration was 85 percent in Kenya, while in neighboring Tanzania more than half of mobile operator Vodacom’s customers actively use M-Pesa.