Mobile Money Services Development: the Case of Africa

Studia Ekonomiczne. Zeszyty Naukowe Uniwersytetu Ekonomicznego w Katowicach ISSN 2083-8611 Nr 356 · 2018

Współczesne Finanse 13

Krystyna Mitręga-Niestrój Blandyna Puszer

University of Economics in Katowice University of Economics in Katowice Faculty of Finance and Insurance Faculty of Finance and Insurance Department of Banking and Financial Markets Department of Banking and Financial Markets [email protected] [email protected]

Łukasz Szewczyk

University of Economics in Katowice Faculty of Finance and Insurance Department of Banking and Financial Markets [email protected]

MOBILE MONEY SERVICES DEVELOPMENT: THE CASE OF AFRICA

Summary: The aim of this study is to assess mobile money services market deve- lopments in Africa in recent years in comparison to other parts of the world, with particular reference to mobile payments. The empirical research question is to find out what is the state of development of the mobile money services, especially mobile payments, in Africa compared to other regions of the world. Nowadays, the mobile money services, including mobile payments, are developing very fast in Africa, comparing not only to other developing countries but also developed ones. The potential of mobile money services to bring access to financial services is observed in the developing world. The key findings show that in Africa the growing number of mobile money services, including mobile payments, can be seen. It is important to say that Africa is in the centre of high development in the area of mobile payments, due to numerous reasons, e.g. the growing use of mobile phones. Africa is the leader in mobile money, which has become an important element of Africa’s everyday life. Furthermore, mobile money services can become the driving force for growth of the domestic economies. There are still very diverse situations between African countries and the local markets vary widely, therefo- re, it is hard to obtain more specific data concerning to mobile payments problem. The paper is based on both literature studies and analysis of statistical data concerning the key aspects of the problem covered by the study.

Keywords: mobile payments, mobile money, African states, developing countries.

JEL Classification: E42, O33, Q55.

Mobile money services development: The case of Africa 79

Introduction

Mobile money services are becoming very important tool, especially in the developing countries, for people (usually low income households) that do not have a broad access to financial services [African Development Bank, 2013, p. 8]. Mobile payments play a vital role in financial inclusion. R. Cull, T. Ehr- beck and N. Holle [2014] state that both, global and national-level policy makers have been embracing financial inclusion as an important development priority. Over the last few years, the growth in mobile money services can be seen all over the world. In some regions the growth is very significant. Among those regions is Africa, which is in the midst of high development in the mobile payments area. The African continent faces challenges in the area of financial technology, which is connected with the fact, that about 80% of adult people in Af- rica don’t have an access to banking services and the majority of the continent is still unbanked [McDermott, 2016, p. 34]. On the other side, there is an increasing need for financial products, which is the result of the growth of African economies. This need can be seen for example in terms of creating infrastructure and services for the people, who have never entered a bank [www 1]. Mobile money services play a prominent role in integrating low-income and unbanked households into wider financial system, especially by providing access to such services as credit, deposit and fund transfer capabilities [International Growth Center, 2016, p. 1]. The aim of this study is to assess mobile money services market develop- ments in Africa in recent years in comparison to other parts of the world, with particular reference to mobile payments. The empirical research question is to find out what is the state of development of the mobile money services, especially mobile payments, in Africa compared to other regions of the world. As the research method, the descriptive and comparative analysis is used.

1. Literature review

The definition of mobile money varies across the communication industry as it covers a wide scope of overlapping applications. In general, mobile money is defined as “service in which the mobile phone is used to access financial services” [GSM Association, 2010, p. 3]. There are three major mobile money services: 80 Krystyna Mitręga-Niestrój, Blandyna Puszer, Łukasz Szewczyk

1. “Mobile banking, which is only one type of mobile money service: it allows customers of a financial institution to access their money, only available to people who possess a formal bank account. 2. Mobile payment – (also known as »m-payments«) is a service allowing unbanked people to purchase or sell goods and services at a merchant shop/store (or remotely) using their mobile wallet through their mobile phone, instead of cash. 3. Mobile transfer – (also known as money transfer »person-to-person« – »P2P« – or »mobile remittances«) it is a service that allows unbanked people to send or receive small sums of money to/from any other mobile phone user (even if they are subscribed to different telephone service providers) across the country, from urban to remote rural areas, and across international borders. In practical terms, the customer must first deposit cash into his mobile wallet. Then, on the phone menu, the customer selects the option »send money«, and enters the recipient’s phone number, the amount he wishes to send and his 6-digit security PIN. The sender can confirm that all the information entered is correct. The receiver will get a text message that he can show to a local mobile company agent to receive the money in cash” [ACP Observatory on Migration, 2014, p. 6-8]. It should be underlined that currently, there is no standard definition of the above terms. Mobile payments are payments for goods and services with a mobile device by taking advantage of wireless communication. A mobile payment service comprises of all technologies that are offered to the user, as well as all tasks that the service provider perform to commit the transaction [Dahlberg et al., 2008, p. 2]. The Committee on Payment and Settlement Systems [2013] defines mobile payments as payments initiated and transmitted by access devices that are connected to mobile communication networks. Transaction values are small in amount and serve the purpose of purchasing goods or services at the point of sale, or remitting funds. Money originates from two major sources, including customer funds, located at banks in the form of a deposit account or credit account (including prepaid cards), or customer “stored-value funds” maintained by mobile network operators [Khiaonarong, 2014, p. 6]. Mobile payment may include a few potential parties (Fig. 1).

Mobile money services development: The case of Africa 81

Fig. 1. Potential parties in the mobile payment chain

Source: Dahlberg et al. [2008, p.. 3].

Mobile payments facilitate two broad types of economic and financial activ- ityt [Flood, West, Wheadon, 2013, p. 72-74]: – puurchases – paymments for gooods and services, in this category, there are both puurchases in point-of-sale and remote purchases; – transfers – paaymments that create no obligation for another party. In terms of technologiical interface, mobile paymments may be divided into three categories (Table 1).

Table 1. Mobile payments in terms of technological interface

Type of interface Characteristics SMS or USSD Message is sent via the mobile network to initiate a payment Mobile device provides a means of accessing the Internet. Payments via this Mobile internet transaction interface are similar to transactions made from a personal computer Mobile device enabled with an NFC chip is placed in proximity to an NFC NFC-enabled terminal and transmits payment information using radio frequencies

Source: Flood, West, Wheadon [2013, p. 72].

The market of mobile paymments is the fastest growing among mobile financial servicces in the world. This situation is mainlyl caused by the high increase of mobile devices on the market and the grrowing interest from consumers. The potential benefits to consumers of mobile payments can be seen by the comparison of mobile paymment methods to traditional paymment methods [Hayaashi, 2012, p. 36]. 82 Krystyna Mitręga-Niestrój, Blandyna Puszer, Łukasz Szewczyk

Mobile payment solutions development should include careful analysis of benefits for the consumers. It is important to take into account that the development is heavily driven by technological understanding and technology limita- tions. T. Dahlberg and N. Mallat suggest that [2002, p. 652]: – it is necessary to view payment solutions from customers’ point of view and not to concentrate only on technological issues, – payment solutions must be built on unfulfilled identified costumers’ needs, – payment solutions based on new technologies must be adopted with educational means that will help to overcome a reluctance to adopt them, – consumers must be able to understand what the payment solution is and what kind of benefits does it provide. The fast adoption of mobile money systems in developing economies, which can be seen in recent years, reflects the benefits they can offer in countries where a large proportion of the population does not have an account at a financial institution or where underdeveloped financial infrastructure means that there is limited access to convenient and affordable financial services [Flood, West, Wheadon, 2013, p. 74]. Nowadays, the mobile money services, including mobile payments, are developing very fast in Africa, comparing not only to other developing countries but also developed ones.

2. Mobile money services in Africa in comparison to other regions of the world

Mobile technologies are changing economic and social life in developing countries, also in Africa, where many people are using mobile phones for a range of financial transactions, such as receiving and sending money transfers. Indeed, mobile money is already being used by banks and mobile network operators to provide millions of unbanked consumers a way to store and access money digi- tally. The limited information available suggests that for millions of consumers in developing countries, mobile money is transforming lives by providing access to financial services and the ability to pay and be paid electronically – some- times for the first time in their lives. Mobile money services, allow unbanked people to use their phones as a bank account: to deposit, withdraw and transfer money with their handset. People can also use mobile systems to pay utility bills and pay for goods in merchant shops. Mobile money is considered as a very convenient instrument in every-day life. Mobile money services development: The case of Africa 83

Mobile bankinng is a financial service commonly available in developed countries, but not in most developing countries due to the low level of financial inclusion through official financial systems/banks. In the case of developing countries, other mobile money services are mostly used by people who do not have personal bank accounts. Indeed, customers often rather use “mobile payment” and “mobile transfer” services, which are available from their mobile phones without the need for a bank account. In practical terms, these two services are accessible from an electronic account, linked to the SIM card in the mobile phone. This electronic account is known as “mobile wallet” and is protected by a personal identification number (PIN), with accounts debited or cred- ited as soon as the transaction takes place. To transact, mobile phone users need to deposit cash into their mobile wallet at the outlet of an ageent of a local mobile telecommunications company. The ageent will get the money from the customer and transmit it to the companny throuugh his/her own mobile phone. If mobile phone users wish to withdraw cash from their mobile wallet, they also need to goo to a mobile money ageent outlet. In the framework of these mobile money services, the sender’s and receiver’ mobile wallets are not linked to their individual bank accounts but to their SIM cards. The balances of all their mobile wallets are maintained bby the mobile network operator [ACP Observatory on Migration, 2014, p. 8-9]. Mobile network operators (MNOs) have a clear business opportunity in offering transaction-based mobile services (payment and transfer services for example) to their customers. Mobile payment services MNO comprise five basic functions: mobile services, customer interface, transaction processing, account provision and settlement (Fig. 2). Mobile service is alwaays provided by MNOs; and settlement, byb banks. Interface, transaction processing and account provision can also be provided by thirdr -party providers.

Always an MNO Various provider types possible Always a bank

Fig. 2. Main function of mobile payment services

Source: [African Development Bank, 2013, p. 8].

84 Krystyna Mitręga-Niestrój, Blandyna Puszer, Łukasz Szewczyk

It is important to note, that the net number of mobile money services is growing rapidly around the world (Table 2). The total net number of mobile financial services in the world increased by almost 40 times within a ten-year period 2006-2016.

Table 2. Net number of total mobile money services by region (2001-2016, end year)

Region 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sub-Saharan 0111111621376499117132 136 140 Africa South Asia 0000011471116303941 41 42 Latin America 00000000029142629 30 30 and the Caribbean East Asia 1113444681319222829 36 37 and Pacific Middle East 0000000015691415 18 20 and North Africa Europe and 01111111111236 9 8 Central Asia Total 1 3 3 5 6 7 7 17 38 69 116 177 230 254 270 277

Source: GSM Association [2017, p. 16], [www 2].

In its simple form, mobile money services allow consumers to use their mobile phone as a virtual wallet, storing “cash” which they can either spend with retailers, pay service providers, transfer to peers, or exchange for physical cash with a participating agent. Companies can also use the service to disburse bulk payments and salaries or receive payments from consumers. These services bear particular relevance to Africa, where mobile money has experienced rapid growth. This is as a result of the continent’s rapid economic growth in general, combined with a large unbanked population in the region. For example, there are more mobile money accounts than bank accounts in countries such as Kenya, Tanzania and Uganda. In essence, mobile money services can provide financial access to consumers without a bank account, and for companies, they can offer lower transactional costs and a scalable alternative to conventional banking services [Muya, 2015, p. 2]. Additionally, Africa has the world’s youngest populations − in around 40 African countries, over 50% the population is under 20 [www 3]. Young people are generally open to new ideas and innovative products. Discussing the issues of mobile money it is worth paying attention to the number of agencies offering mobile money service. Table 3 and Figure 3 presents the cumulative number of agents transactional outlets that have been registered as at the end of the months indicated, Table 3 and Figure 4 – active agents outlets that have facilitated at least one transaction within the past 30 days of the indicated months. Mobile money services development: The case of Africa 85

Fig. 3. Percentage of active agents by region in 2011-2016

Source: GSM Association [2017], [www 2].

Fig. 4. Percentage of registered agents by region in 2011-2016

Source: GSM Association [2017], [www 2].

86 Krystyna Mitręga-Niestrój, Blandyna Puszer, Łukasz Szewczyk

The development of mobile money services is becoming an important driver of financial inclusion. By 2011, registered mobile money accounts grew to 86.8 million, with more than a quarter of them active (Table 4). When the Global Findex surveey was updated in 2014, it showed the number of unbanked people globally had dropped from 2.5 billion to two billion in just 5 years [GSM Associa- tion, 2017, p. 16]. Much of the gain in low-income countries has been attributed to the spread of mobile money. The biggeest impact was felt in Sub-Saharan Africa, where 12 percent of adults in the reegion had a mobile money account, comparing to only 2% of adults worldwide [Demirguc-Kunt, Klapper, Singn er, 2015, p. 4]. In 2015, mobile moneey accounts surpassed bank accounts in Sub-Saharan Africa (Fig. 5 and 6). By 2016, there were 277 million rege istered accounts in Sub- Saharan Africa, of which more than 100 million were active.

Fig. 5. Percentage of registered mobile money accounts by region, 2011-2016

Source: GSM Association [2017], [www 2].

Table 3. The number of active agents and registered agents by region (2011-2016)

December June December June December June December June December June December Region 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 Active agents East Asia and Pacific 122 487 139 226 143 275 157 926 161 710 163 556 165 666 211 921 231 954 267 777 296 494 Europe and Central Asia 98 945 101 344 105 596 109 863 114 422 122 112 130 476 133 825 137 108 141 645 148 223 Mobile moneyservicesdevelopment:Thecaseof Africa Latin America and the Caribbean 5 438 7 598 11 020 15 444 18 923 26 279 28 935 33 609 45 405 55 363 66 186 Middle East and North Africa 1 510 4 175 4 669 5 182 7 886 11 670 13 264 16 728 22 865 23 430 27 427 South Asia 88 895 132 172 172 959 274 838 380 908 494 924 578 865 612 328 710 931 773 581 837 384 Sub-Saharan Africa 98 009 149 403 222 288 268 548 365 998 438 289 534 034 615 221 734 118 807 974 906 052 Eastern Africa 83 899 129 994 188 290 222 061 304 338 346 816 407 378 451 923 496 997 527 886 584 430 Middle Africa 348 708 2 092 6 545 9 697 24 070 36 559 43 136 66 104 53 857 64 625 Southern Africa 3 212 3 658 4 719 5 310 6 792 9 511 10 976 11 908 14 992 17 567 18 793 Western Africa 10 550 15 043 27 187 34 632 45 171 57 892 79 121 108 254 156 025 208 664 238 204 Global 415 284 533 918 659 807 831 801 1 049 847 1 256 830 1 451 240 1 623 632 1 882 381 2 069 770 2 281 766 Registered agents East Asia and Pacific 187 643 212 103 230 344 249 884 251 313 263 643 284 006 347 893 381 108 419 642 454 894 Europe and Central Asia 116 387 119 229 124 226 129 246 134 639 143 612 154 277 158 549 163 027 168 533 177 088 Latin America and the Caribbean 7 005 9 843 12 274 41 333 24 903 42 660 68 116 84 029 97 790 113 203 167 276 Middle East and North Africa 2 534 5 014 5 295 6 012 10 339 20 214 24 979 40 829 51 135 68 660 83 329 South Asia 178 483 248 584 330 177 506 936 731 429 1 030 471 1 273 845 1 436 393 1 588 641 1 768 510 1 879 888 Sub-Saharan Africa 178 299 255 815 383 708 469 397 651 704 784 818 949 843 1 072 161 1 239 504 1 401 560 1 569 510 Eastern Africa 136 858 195 792 273 519 315 139 437 178 521 295 599 696 659 228 703 277 775 257 861 015 Middle Africa 1 620 4 954 20 593 34 296 48 776 80 715 123 115 130 121 164 534 159 397 195 160 Southern Africa 12 045 13 303 15 286 16 329 18 403 Re23 156 30 457 36 036 42 801 49 466 41 505 Western Africa 27 776 41 766 74 310 103 633 147 347 159 652 196 575 246 776 328 892 417 440 471 830 Global 670 351 850 588 1 086 024 1 402 808 1 804 327 2 285 418 2 755 066 3 139 854 3 521 205 3 940 108 4 331 985

Source: GSM Association [2017], [www 2].

87 88 Krystyna Mitręga-Niestrój, Blandyna Puszer, Łukasz Szewczyk

Fig. 6. Percentage of active mobile money accounts (90 days) by region, 2011-2016

Source: [GSA [2017], [www 2].

At the end of 2016, there were 277 mobile moneye services operatinng in the world. In eighty four countries the mobile money services are available, which accounts for about 40% of all countries in the world. It is worth noting that 52% of mobile money servicces are located in Sub-Saharan Africa. Africa has a highh percentage of unbanked population and the highest growth rate in mobile phone usagee. Over time, mobile moneye services will become safer, more convenient, speedier and less costlyl . Currently, there are two main African mobile money service models: – baank-led model with additional services to existingn customers through a mo- biile banking application − a model by which banks take over at least account prrovision and settlement; under a model for mobile paayment service, customers have a direct contractual relationship with a licensed financial institution; – non-bank-led model with transformational outreach to the unbanked population − a model bby which nonbank companies are responsible for all the basic functions except settlement; in this model they exchangee cash for electronic value recorded in a virtual account on the server of a non-bank organization, Mobile money services development: The case of Africa 89

such as a MNO or an issuer of stored-value cards [African Development Bank, 2013, p. 7]. In Africa, bank-led models are the most often applied in middle-income countries, for example South Africa. In these countries, the financial sectors are characterized by a variety of distribution channels, including traditional ATM branches, mini-ATMs, mobile phones and debit/credit cards, in partnerships with retail institutions and others [African Development Bank, 2013]. African low-income countries, which confronted with social and economic development challenges, are dominated by the non-bank-led model (MNO-led model). The success of the model is dependent on a large reliable network of agents and low risk management of electronic value for a cheaper but secured solution to financial exclusion in low-income African countries. By the end of 2016, there were over 930 000 active agents [African Development Bank, 2013, p. 11].

3. Mobile payments in Africa

Mobile payment is a service associated with the use of a mobile phone. Cel- lular technology spread rapidly in West Africa in the 2000s. The presence of private companies emerging on these markets in the 1990s contributed to this, following the deregulation of the telecommunications sector in most countries. These operators, mainly new in the region, finance the modernization and ex- pansion of the infrastructure network. They are significantly increasing their quality and geographical coverage [African Development Bank, 2015, p. 17]. Mobile payments are already booming in the world. The total number of mobile payments users in the world increased by over 380 million in years 2009-2016 (Fig. 7).

90 Table 4. The number of active accounts (90 days) and registered mobile money accounts by region, 2011-2016

December June December June December June December June December June December Region 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 Active accounts (90 days) Krystyna Mitr East Asia and Pacific 2 254 076 2 678 660 2 918 023 2 196 473 2 242 818 2 571 187 2 914 831 3 387 328 4 256 511 6 221 598 7 123 829 Europe and Central Asia 409 882 435 572 525 676 602 593 711 443 799 742 893 059 1 046 251 1 173 378 1 251 441 1 399 967 Latin America and the Caribbean 919 527 1 404 808 2 082 904 2 808 719 4 768 042 5 772 632 6 445 122 7 213 285 8 679 374 9 010 596 10 768 779 Middle East and North Africa 51 646 795 357 1 369 529 1 561 007 6 146 681 7 903 911 9 163 630 12 035 744 12 648 434 13 479 867 13 863 931

South Asia 1 358 139 3 172 544 5 357 821 8 491 740 12 977 230 15 754 300 19 714 834 23 030 850 30 373 208 34 639 432 40 367 741 ę Sub-Saharan Africa 17 925 656 23 311 834 29 689 186 34 563 801 42 484 581 52 497 941 63 187 920 73 619 303 85 783 578 90 730 771 100 058 018 ga-Niestrój, BlandynaPuszer, Eastern Africa 16 183 360 20 875 655 25 492 335 28 224 729 33 730 818 39 687 309 45 196 754 50 495 607 57 438 114 59 352 292 64 284 167 Middle Africa 13 981 59 512 238 047 643 332 1 045 621 2 184 210 3 971 316 4 632 107 5 131 763 4 042 561 5 085 448 Southern Africa 238 895 299 286 438 180 849 521 975 973 1 154 406 1 294 191 1 537 922 1 743 863 1 975 435 2 109 644 Western Africa 1 489 420 2 077 381 3 520 624 4 846 219 6 732 169 9 472 016 12 725 659 16 953 667 21 469 838 25 360 483 28 578 759 Global 22 918 926 31 798 775 41 943 139 50 224 333 69 330 795 85 299 713 102 319 396 120 332 761 142 914 483 155 333 705 173 582 265 Registered accounts East Asia and Pacific 17 199 257 19 120 579 20 793 133 17 838 720 16 545 979 18 497 841 20 380 890 22 873 837 27 190 560 32 341 141 36 554 635 Europe and Central Asia 5 633 009 5 841 206 7 167 521 7 696 938 8 220 648 8 596 754 9 085 826 9 723 034 10 423 691 9 824 827 10 424 941 Latin America and the Caribbean 1 946 650 3 177 904 4 449 230 6 678 089 9 796 845 12 913 126 13 379 742 14 526 429 16 949 063 18 619 519 22 951 118

Middle East and North Africa 2 670 622 5 479 252 33 834 590 34 162 135 35 667 668 36 578 737 38 011 140 39 011 063 40 352 519 42 094 282 44 110 373 Ł South Asia 6 508 917 11 705 213 19 060 747 28 870 236 42 162 061 53 698 977 67 273 496 87 741 187 122 068 946 138 717 017 164 159 406 ukasz Szewczyk Sub-Saharan Africa 52 862 515 65 164 483 79 848 705 97 276 619 119 219 518 142 545 255 172 061 698 200 473 848 234 071 735 260 528 300 277 389 045 Eastern Africa 42 218 701 52 317 055 61 822 421 71 535 301 85 801 723 98 561 436 108 825 104 117 147 311 131 116 084 147 852 372 157 902 516 Middle Africa 142 126 610 569 2 566 249 4 860 931 7 248 768 9 778 194 15 187 855 18 613 624 20 713 632 20 151 589 22 373 264 Southern Africa 1 297 574 1 554 190 1 921 739 2 903 100 4 166 807 5 619 661 7 230 422 8 976 011 10 281 952 10 683 181 5 462 725 Western Africa 9 204 114 10 682 669 13 538 296 17 977 287 22 002 220 28 585 964 40 818 317 55 736 902 71 960 067 81 841 158 91 650 540 Global 86 820 970 110 488 637 165 153 926 192 522 737 231 612 719 272 830 690 320 192 792 374 349 398 451 056 514 502 125 086 555 589 518

Source: GSM Association [2017], [www 2]. Mobile money services development: The case of Africa 91

Fig. 7. Nuumber of mobile payment users from 2009 to 2016, by region (in millions)

Source: [www 3].

In Africa less than a quarter of people have a bank account, but more than 80% have access to mobile phones [McDermott, 2016, p. 35]. The region is the second most engageed after Asia (Fiig. 8). This trend, like in Asia, is driven by the spread of mobile telephony, where the mobile Internet bringss a lot of benefits to the region; in addition, developed countries are more likely to be taken for granted [McDermott, 2016].

Fig. 8. Mobile payment users from 2009-2016, by region (as a percentage of all users in the world)

Source: [www 4]. 92 Krystyna Mitręga-Niestrój, Blandyna Puszer, Łukasz Szewczyk

An important factor for mobile money services development is Internet pene- tration, which is certainly lower in Africa but the trend is upward and depends on the country. When assessing the mobile payments market, it is worth paying attention to the fact, that South Africa is one of the largest economies in the region, and second only to Nigeria. In South Africa, the use of the Internet is higher than 60%, and almost half of the population owns a smartphone. Blackberry currently has the largest market share at the level of 36%, while the sale of Android phones points to the fact that it can become the main operating system. In addition, the SnapScan mobile payment application has started operating in South Africa, enabling consumers to pay for parking, groceries and even donations to the church or to the homeless via a mobile phone. The South African bank FNB reports that its clients make 230 million mobile transaction transactions per month compared to 45 million on the popu- lar M-Pesa platform in Kenya. Kenya is another country with an increasing number of mobile connections and the most important trend in Kenya is the use of mobile money [McDermott, 2016, p. 35]. Since the second half of the 2000s, the growth of the mobile telephone network prompted mobile operators to develop additional mobile services, including mobile payments. In Africa the main operators, who participated in its im- plementation, are multinational telecommunications companies, including the South African MTN, the French Orange, the Indian Airtel, the English Vodafone and the Emirati Etisalat, which includes the West African subsidiaries of Mo- rocco, Telecom acquired by Etisalat in 2014. Alongside these large multinational groups, there are other regional players on the market, for example the Nigerian Globacom, Inova in Burkina Faso, Celpaid in Côte d’Ivoire and Ferlo in Senegal [African Development Bank, 2015, p. 18]. Table 5 presents examples of the main mobile payment operators on selected African countries.

Table 5. The main mobile payment operators on the West African Market

Nigeria Cote d’Ivoire Togo Benin 1 2 3 4 Glo xchange (Glo) Orange Money Flooz (Etilasat) Flooz (Etilasat) Airtel Money (Airtel) MTN Mobile Money Wari MTN Mobile Money EasyWallet (Etisalat) Flooz (Etilasat) Togocell ASMAB (IMF) MTN Mobile Money QashServices Wari Celpaid Wari Guinea-Bissau Senegal Burkina Faso Niger MTN Mobile Money Orange Money Airtel Money (Airtel AirtelMoney Orange Money Yoban’tel Inovapay Flooz Wari TigoCash Mobicash (Etilasat) Orange Money MobileCash Wari Wari Wari Mobile money services development: The case of Africa 93

Table 5 cont.

1 2 3 4 Sierra Leone Ghana Mali Guinea Airtel MTN Money Orange Money Orange Money Splash Airtel Money Mobicah (Etilasat) Wari Africell Tigo Cash Wari Wari

Source: African Development Bank [2015, p. 18].

MNOs offer mobile payments as part of their mobile services, Table 6 shows mobile money services organized in mobile payments.

Table 6. Types of different money payments services and platforms available in the East African Community

Category Service Platform offering service M-payments Buy airtime (on-network) All mobile money platforms Pay post-paid phone bills All mobile money platforms Educational institutions (school fees) M-Pesa (Lipa Karo) MTN Mobile Money Uganda Financial institutions (loan repayments) M-PESA Kenya Health service providers (charges) M-PESA Kenya Utility providers (monthly bills for All mobile money platforms electricity, water, sewage, Pay TV) Hotels (services) M-PESA Kenya Churches and NGOs (contributions) M-PESA Kenya M-PESA The United Republic of Tanzania MTN MobileMoney Uganda Businesses (customer to business, M-PESA Kenya (Nunua na M-PESA) i.e. payments) MTN MobileMoney Uganda Airtel Money across EAC Bulk payments (business to customer, M-PESA Kenya i.e. salaries) M-PESA The United Republic of Tanzania MTN MobileMoney Uganda MTN MobileMoney Rwanda Mobile ticketing (buy tickets M-ESA Kenya for events, hotels, airlines etc.)

Source: UNCTAD [2012, p. 6].

MNOs started by targeting entities that receive recurring payments from various clients, such as energy companies (e.g. power, water, sewerage, pay TV) and those that make wholesale payments (e.g. salaries and school fees). 94 Krystyna Mitręga-Niestrój, Blandyna Puszer, Łukasz Szewczyk

Many of these services have been launched as free promotional offers to help build a business and prove its utility to the consumer. “For example, Safari- com clearly states that “it is currently FREE to pay a bill using M-PESA. Please note that this is an initial offer valid only for a limited period” for the Nunua service on M-PESA” [UNCTAD, 2012, p. 7]. Some service providers stated that they can eliminate the costs for their customers who pay premiums for mobile money, because they provide them with a cheaper way to regularly collect fees from customers. “For example, the National Water and Sewerage Company in Uganda has scrapped all its cash collection centers and resorted to using banks and mobile money as the only means of repaying” [UNCTAD, 2012, p. 7]. MNOs also began to cultivate buyers for mobile payments, mainly for large entities with many branches, such as supermarkets (for example M-PESA cooperates with supermarket chains Uchumi and Naivas in Kenya, and MTN MobileMoney cooperates with supermarkets Uchumi in Uganda) [UNCTAD, 2012, p. 7]. It is worth emphasizing that sectors such as education, health, tourism and insurance, are gradually “waking up” to the opportunities of using mobile money as another payment channel for their customers.

Conclusions

Mobile money services market has flourished on African continent in recent years in comparison to other parts of the world (taking under consideration among others number of: total mobile money services, mobile money accounts, agents offering mobile money service and mobile payment users). It can be seen that Africa is at the forefront of the mobile banking revolution, spearheaded by the mobile phone technological platform for financial services. Furthermore, the number of mobile Internet subscribers is rising in Africa. Africa seems to become the worldwide leader in mobile money services. The Africans have will- ingness and ability to absorb innovations in the area of mobile money services. Mobile money services in African countries started to transform the domestic markets. African mobile money services are based rather on non-bank-led model which is typical for lower-income developing countries. It can’t be forgotten that properly functioning mobile money services require a supportive ecosystem, with a number of players and infrastructure. Among them are mobile network operators, which provide the technological infrastructure and offer ‘mobile products’ which are tailored-made for customers needs in Africa. Additionally, Mobile money services development: The case of Africa 95

MNOs ensure security of transactions and distribution. They are especially important in low-income countries, where the banking sector is not sufficiently developed. Young societies of growing African economies are marked by high demand for financial services. There are many factors, however, which cause the high number of unbanked people reluctant to use traditional financial services deliv- ered by banking institutions. Mobile money services development (such as for example mobile payments), can create opportunity to “switch over” to new and innovative financial services excluding “traditional” path of its evolution. Against this background, the question arises whether or how this will influence the activities of banking sector in Africa. Or it will contribute to further vast development of Fintech industry on African continent.

References

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ROZWÓJ USŁUG PIENIĄDZA MOBILNEGO: PRZYPADEK AFRYKI

Streszczenie: Celem artykułu jest ocena rozwoju rynku usług pieniądza mobilnego w Afryce w ostatnich latach w porównaniu z innymi częściami świata, ze szczególnym uwzględnieniem płatności mobilnych. Głównym pytaniem badawczym jest ustalenie, jaki jest stan rozwoju mobilnych usług finansowych, zwłaszcza płatności mobilnych, w Afryce w porównaniu z innymi regionami świata. Obecnie usługi mobilnego pieniądza, w tym płatności mobilnych, rozwijają się w Afryce bardzo szybko, w porów- naniu nie tylko z innymi krajami rozwijającymi się, ale również rozwiniętymi. Pieniądz mobilny ma bardzo duży potencjał w obszarze zapewnienia dostępu do usług finansowych w krajach rozwijających się. Kluczowe wnioski wskazują, że w Afryce można zaobserwować rosnącą liczbę usług związanych z mobilnym pieniądzem, w tym płat- ności mobilnych. Należy podkreślić, że kontynent afrykański jest współcześnie „centrum rozwoju” płatności mobilnych, z wielu powodów, m.in. rosnącej liczby użytkowników telefonów komórkowych. Usługi pieniądza mobilnego, stały się ważnym elementem codziennego życia w Afrykańczyków. Co więcej, usługi mobilnego pieniądza mogą stać się siłą napędową wzrostu krajowych gospodarek. Nadal występują wyraźne różnice w rozwoju usług mobile money między państwami afrykańskimi i wciąż trudno jest uzyskać bardziej szczegółowe dane dotyczące tego rynku. Artykuł opiera się zarówno na badaniach literaturowych, jak i na analizie danych statystycznych dotyczących kluc- zowych aspektów problemu objętego badaniem.

Słowa kluczowe: płatności mobilne, pieniądz mobilny, państwa afrykańskie, kraje rozwijające się.