Africa’s Mobile Operators Are Failing to Meet the Innovation Challenge

Innovation is one of those words that everyone has to say. It’s always a good thing when it’s disrupting others but not if it upsets your own carefully prepared apple cart. Russell Southwood looks at how innovation in Africa’s banking industry compares to the continent’s mobile industry and what the MNOs might do.

We have provided a steady stream of coverage looking at how Africa’s mobile operators have involved themselves in innovation and start-ups, most recently: Africa’s three major mobile operators now have a digital playbook – highlighting the continent’s digital services sector:

The interesting thing is that almost all of this innovation is not in their core business streams. You can argue that for those who have more developed m-money revenues that there is potential innovation impact through Fintech start-ups. But almost without exception there are no start-ups seeking to explore how the traditional core mobile business model might be recast for a digital future.

The Tech And Payments Promise Of Africa

The next great tech frontier?

That would be Africa, according to recent comments from Alibaba Group Holding’s founder and chairman Jack Ma. “The opportunity in eCommerce in Africa lies in the fact that Africa is lacking logistics, infrastructure and payment systems,” Ma said at a conference in Johannesburg, according to Bloomberg.

Digital payments, FinTech and eCommerce are expanding slowly but surely in Africa. In Kenya, banks are pursuing regulatory approval to use distributed ledger technologies to help facilitate payments and create credit scoring models. In Nigeria, Microsoft and First Bank are linking up to bring financial services to consumers there.

Image result for mobile paYMENT AFRICAAnd just this week, Stripe, Visa and other firms invested $8 million in Paystack, a Nigerian firm that enables developers to create payment tools via its APIs and connects multiple payment processors by handling transactions for merchants and consumers. In a new PYMNTS interview, CEO Shola Akinlade talks about the challenges of improving payments in his home country, including those related to infrastructure and connectivity.

That doesn’t mean the path to a larger digital ecosystem will be a smooth one. Despite being home to Africa’s biggest mobile phone market, Nigeria is seeing a decline in banked adults in the country. Financial inclusion in the African country reportedly has declined close to 4 percentage points from 2014 to 2017, now standing at 39 percent at the same time that the Sub-Saharan African average of banked people increased more than 8 percentage points to 43 percent.

In Kenya 73 percent of people use mobile money — compared to under 6 percent in Nigeria, noted Bloomberg, citing data from the World Bank.  “We’re taking baby steps when we should be running,” Yomi Ibosiola, an associate director at Deloitte Nigeria’s data analytics practice, said in an interview with Bloomberg.

Despite the speed bumps, Africa holds great promise for some of the world’s biggest investors. Find out more here.

The mobile phone is more common than access to electricity in sub-Saharan Africa

A DECADE after mobile phones began to spread in Africa, they have become commonplace even in the continent’s poorest countries. In 2016 two-fifths of people in sub-Saharan Africa had mobile phones. Their rapid spread has beaten all sorts of odds. In most African countries, less than half the population has access to electricity. In a third of those countries, less than a quarter does. Yet in much of the continent people with mobile phones outnumber those with electricity, never mind that many have to walk for miles to get a signal or recharge their phones’ batteries.

Mobile phones have transformed the lives of hundreds of millions for whom they were the first, and often the only, way to connect with the outside world. They have made it possible for poor countries to leapfrog much more than landline telephony. Mobile-money services, which enable people to send cash straight from their phones, have in effect created personal bank accounts that people can carry in their pockets. By one estimate, the M-Pesa mobile-money system alone lifted about 2% of Kenyan households out of poverty between 2008 and 2014. Technology cannot solve all of Africa’s problems, but it can help with many.

the Economist reports

Kenya to launch mobile money interoperability in March 2018

Kenyans will now be able to transfer funds across networks, this comes after three of the country’s mobile money platforms Safaricom’s M-Pesa, Telkom money, and Airtel money went into an agreement which aims to bring down the cost of money transactions. The pilot phase of the platform was launched on Monday, 22 January 2018. The interoperability will be rolled out nationally in March 2018.

Kenya: Mobile money interoperability to launch in MarchInteroperability will also present consumers with choices of services and not being locked into one service or mobile network, given how costly it has been to transfer money between mobile money services.

According to Kenya’s ICT Cabinet Secretary, Joe Mucheru, once fully functional, it will improve efficiency, and likely increase competition.

“Mobile money users will be able to send and receive money across networks once the pilot window is over. The first phase of the pilot between Airtel Money and Safaricom’s Mpesa will start on Monday next week before Telkom Kenya’s mobile money system comes on board mid-February,” said Mucheru.

Safaricom’s M-PESA is the dominant service in Kenya’s mobile money ecosystem as it holds over 70% market share as per the latest report by the Communications Authority of Kenya.

“What this means is that when you send money from one network to another, that money goes straight into your wallet. As you know at the moment, when you send money across networks, you receive an SMS and you have to go cash it, and you can’t easily use it,” said Mucheru.