Sub-Sahara mobile money at $1,5bn by 2019

Sub-Sahara Africa is adopting mobile financial services at a pace seen in few other places, presenting banks and mobile-network operators (MNOs) with a set of strategic choices that will go a long way toward determining their success in the region, according to a study by The Boston Consulting Group (BCG).

The use of mobile financial services in sub-Saharan Africa to do such things as pay utility bills and send money to relatives could produce an estimated $1,5bn in fees for mobile-money providers by 2019, according to the research.

The report says sub-Sahara Africans are looking for more secure ways to borrow and save money and are open to other financial products delivered using mobile phones, including loans and insurance. With the population in sub-Sahara Africa growing and becoming wealthier, the number of people aged 15 or older with an individual annual income $500 or more will rise to more than 460 million by 2019.

According to BCG, by 2019 there will also be some 400 million unique mobile-phone subscribers and almost 150 million traditionally banked sub-Sahara Africans. That will leave some 250 million sub-Saharan Africans aged 15 or older who have incomes of $500 or more and mobile phones but no traditional bank account. This gives a sense of the potential market for mobile financial services.

“Mobile financial services aren’t new, but they are at an inflection point and adoption is accelerating,” said Hans Kuipers, a BCG partner and co-author of the report. “This is not something that African banks or MNOs can afford to ignore. A bank or MNO that isn’t active in the market runs the risk of becoming less and less relevant.”

Network of agents

A critical piece of infrastructure, though, is a network of agents — physical places where sub-Sahara African consumers can sign up for a mobile financial service and make deposits and withdrawals.

Good governance is critical because of the partnerships that will be needed to create an ecosystem for mobile service offerings, according to Kuipers.

“Banks and MNOs are complementary in this space; each has something the other needs. In many cases, it will make sense for them to team up.”

The vendors who want to establish a strong market position are going to need to find the right partners and start developing an offering, according to Kuipers.

“The time to do those things is now,” he said. — Fin24.