MTN enlists International Finance Corporation to grow fintech unit
Partnership with World Bank affiliate is aimed at growing network of distribution agents
MTN is stepping up its mobile money efforts in SA through a partnership with the International Finance Corporation (IFC), an affiliate of the World Bank, aimed at growing its network of distribution agents in the country.
With declining voice revenues and data margins squeezed due to public pressure and regulations, mobile operators have been looking at other ways to create revenue streams from their large customer bases. For MTN, which has about 278-million subscribers across Africa and the Middle East, fintech is one of its areas of focus, driven by mobile payments.
In the year to end-December 2020, MTN SA contributed R1.05bn to the group’s R13.5bn of fintech revenues. Fintech accounted for about 8% of the group’s full-year revenues, up 23.9% from 2019. By the quarter ending in March, the group had 46.6-million customers on its mobile money (MoMo) platform.
But in SA growth has been hard won on this front. MTN first launched its mobile money platform locally in 2012 before pulling the plug in 2016 due to a lack of commercial viability because three-quarters of the population has bank accounts. Vodacom shut its M-Pesa mobile money service in SA in the same year, citing similar reasons.
Having taken a second swing at the SA market from the start of 2020, with the aim of reaching 1-million customers in the first year, the operator now has a base of 3.2-million users, Felix Kamenga, chief officer for mobile financial services at MTN SA, told Business Day on Wednesday.
MTN says it has entered into a $2m (R28m) partnership with the IFC to expand the mobile money business in SA.
Kamenga said working with the IFC makes sense given their common goal to increase financial inclusion.
“The partnership will target the unbanked and underbanked population through establishing a strong network of MoMo agents in the country,” he said.
MTN and the IFC will each put up $1m for the partnership.
As part of the tie-up, MTN aims to recruit 10,000 agents by year’s end to grow its local distribution network. A team of trade representatives will be created and trained by MTN SA and the IFC “to manage a portfolio of MoMo agents, support them in growing their business and managing compliance regulations like anti money-laundering and know your customer”.
Agents are key in MTN’s mission to get more people to sign up for its mobile payments service. Though the mobile operator already has a network of distributors for products such as airtime, Kamenga said it is necessary to recruit and train a different type of agent given the strict regulations about financial services.
The IFC is considered the largest global development institution focused on the private sector in developing countries. It says its mission is to advance economic development by encouraging the growth of private enterprise in developing countries.
Kamenga said the IFC “has assisted with funding and advisory services in several other fintech operations in Africa, and this partnership provides the opportunity to bridge the digital divide and broaden financial inclusion in SA”.
The IFC has in the past helped mobile money businesses in countries such as the Ivory Coast and Madagascar.
The MTN fintech business is thought to be worth about $5bn, with the group aiming to have the unit account for a fifth of revenues within five years.
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