Mobile Money in Africa
According to a new report by GSMA, mobile money adoption saw massive growth in 2021, with over $1 trillion processed annually. The most significant drivers of this growth were identified as merchant payments, which had doubled year on year, reaching over $5.5 billion in transactions per month.
Sub-Saharan Africa was the most active of the regions in Africa in this growth. Regionally, sub-Saharan Africa contributed over 173 liver services, 621 million registered accounts, 184 million active accounts, $36.7 billion in transaction volume, and $701.4 billion in transaction value. Kenya and Ghana lead the entire mobile money adoption movement in Africa however, especially with the successes of MPesa in Kenya.
While Kenya is a bigger market with mobile money transactions equivalent to over 87 percent of GDP in the country, Ghana represented about 82 percent and is regarded as a faster-growing mobile money market. Nigeria occupies little of this overall continental potential as mobile money adoption has not enjoyed the same successes as in other African countries.
MTN gets approval to start MoMo service
In what is to be a very strategic move, however, telecoms heavyweight, MTN Nigeria received the final nod to operate mobile money (MoMo) payment service bank (PSB) license in Nigeria. This was announced, yesterday, by the company that it had finally been accorded permission to operate its payment services bank by the apex regulator, the Central Bank of Nigeria (CBN), and that it would soon be offering financial services under the designated license requirements.
The telecoms Group had initially announced in November 2021 its intent towards getting final approval of the license, saying it was subject to the fulfillment of certain conditions as stipulated by the CBN. With this license, the company will offer a wider range of mobile financial services beyond the traditional person-to-person (P2P) MoMo mobile money transfers such as lending and bill payments.
As a document detailing this approval reads: “We refer to our notification issued on November 5, 2001, in which we communicated receipt of the approval in principle from the Central Bank of Nigeria (CBN) for MoMo Payment Service Bank Limited (MoMo PSB).
“MTN Nigeria Communications Plc (MTN Nigeria) announces the receipt of a letter dated April 8, 2022, from the CBN addressed to Momo PSB conveying final approval to commence operations. The date of commencement will be communicated to the CBN in accordance with its requirements.
“MTN Nigeria affirms its commitment towards the financial inclusion agenda of the CBN and the Federal Republic of Nigeria and we are excited about this opportunity to support its fulfillment.”
This new success by the company stands as part of MTN’s strategy to structurally separate its fintech and fiber units as part of its Ambition 2025 Plan. This move comes at the back of MTN’s rebrand from a telco to a tech company.
Speaking on the development, the Chief Executive Officer, Ralph Mupita, points out,
“We are grateful to the CBN for granting the final approval to commence the operations of MoMo PSB, which is an important milestone for our Ambition 2025 strategy.”
The company’s service revenue in Nigeria grew by 23.3 percent while going past its mid-term target, with major drivers for growth in voice, data, and fintech service revenue lines. Data revenue also rose by 55.3 percent, as its 4G coverage expansion continued. The company’s 4G network now spans over 70.3 percent of the population, up from 60.1 percent in December 2020.
Fintech onwards: The mobile money gamechanger for Nigeria
With mobile penetration surging on the continent, and the economic value of mobile technologies and services, there is a huge market opportunity for MTN and other telecoms companies in Africa. Even as 4G networks penetrate deeper in the market, the rise of 5G will enable other remarkable trends across the continent. Mobile payments revenue in Africa could hit over $20 billion by 2025. These show significant value for the mobile money services to grow and surge in Africa’s emerging markets. It is amazing how mobile money dominates fintech markets in areas where it operates effectively.
It will be very interesting to see how MTN’s emergence into the fintech space will herald a gradual move of other telecoms players into the sector. It also increases the competitiveness of the sector in light of the flurry of attention that the fintech sector enjoys in Africa. Many fintech companies and banks will be keen on how to keep afloat the market, in what appears to be a major stirring of the market waters by this stellar MTN move.