FELIX KAMENGA: Mobile money will continue to flourish after the pandemic

In the Business Beyond Covid series, CEOs and other business leaders and experts in their sectors look to the future after Covid-19. What effect has the pandemic and resulting lockdown had on their industries and the SA economy as a whole? Which parts will bounce back first and which will never be the same again? Most importantly, they try to answer the question: where to from here?

With data usage and internet traffic up by between 50% and 70% in SA, the mobile money ecosystem is standing out as a safe, affordable and accessible solution to getting economies back on track during and following the Covid-19 devastation.

Mobile money is quickly proving to be a safer, more secure way to transact, as traditional workplace structures and in-store transaction habits are upended by the coronaivurs crisis. For good reason, some stores around the world are already banning the use of cash to prevent risk of transmission of the virus.

SA retailers are also forming partnerships with financial service providers to bring cashless banking to the people, notably in rural areas. This makes a lot of sense: with greater collaboration we are better enabled to heed the call of the president to do more to stay safe and protect others, and generally try to limit the risks in every way we can.

As we all adapt to this new normal, the recent GSMA [an industry organisation that represents the interests of mobile network operators worldwide] state of the industry report on mobile money highlights that the trend towards mobile money kicked into high gear in 2019 when the number of registered mobile money accounts surpassed 1-billion for the first time.

Sub-Saharan Africa boasted impressive double-digit growth across registered accounts, and in the value and volume of mobile transactions.

This growth has only been amplified by the Covid-19 crisis, with all major banks telling IT media recently that they have witnessed an uptick in their mobile payment offerings. This is being attributed to more people regarding mobile money as a safer way to transact and pay for services during the lockdown. Payment service provider DPO SA says QR code-based mobile wallets are also seeing rapid growth during this period.

While surviving the crisis remains very much on everyone’s radar, it is good to find some positives amid the storm. The increased and inevitable move towards mobile money stands out as one. Apart from the safety aspect — even using ATMs right now is far less popular due to people standing in queues and using the same keypad — a great opportunity exists to boost levels of financial inclusion and ensure far more people around the country remain safe through greater accessibility to affordable digital channels, provided through mobile networks they trust.

The good news is that innovative, secure and accessible solutions are becoming increasingly available. Demand for interconnected, multi-purpose solutions will only continue to increase, opening the door to even more advanced invention and collaboration by mobile providers and financial services companies.

The opportunities are even broader than this. GSMA notes, for instance, that in 2019 a growing number of mobile money services crossed the threshold to become commercially sustainable — 60% of providers reported positive earnings. Direct revenues from mobile money are also supporting investment in innovative products and services, network expansion, and healthy and sustainable agent commissions.

With trusted brands, widespread distribution and secure channel access, more and more providers are delivering services sustainably and at scale. This trend will only increase and potentially serve as a game-changer in Africa and other emerging markets, which are desperate for stronger, scaleable new business opportunities to generate jobs and growth, with limited overheads and costs.

Mobile money agents

Notably, the mobile money industry has created opportunities for entrepreneurs in emerging markets to become agents. The number of agent outlets has almost tripled over the past five years, and the reach of a mobile money agent is now seven times that of ATMs and 20 times that of bank branches. In rural and hard-to-reach areas, mobile money agents have had a transformative impact on financial inclusion.

Meanwhile, agents are seeing their monthly incomes rise substantially with commissions that are not taking away from investment in other areas of the mobile money business. We expect to see similar statistics as our mobile money service, MoMo, launched in January this year, takes off.

Mobile money is about improving financial inclusion and enabling economic transformation for all South Africans. The aim is to provide access to those who have previously been excluded from participating in the economy, while making it even easier for those who are economically active, to participate more effectively.

Since the nationwide lockdown came into effect MTN has seen an increase in MoMo registrations and usage, specifically in peer-to-peer remittances with people sending money to family and friends. We have also seen an increase in the use of the service regarding value-added functionalities, for example, the purchase of pre-paid electricity.

This supports the case that more South Africans are starting to consider mobile money as a safer, affordable and more convenient form of transacting.

Of course, innovation must never stop — the much broader availability of mobile phones puts us in a position to serve a market that hasn’t been adequately catered for. SA already has the highest cellphone penetration on the continent, and the highest adoption of smartphones.

The market in SA is also characterised by significant population growth with a youthful demographic, relatively high levels of data and digital adoption, in addition to the large unbanked population.

All these factors make SA conducive to the creation of solutions the market needs, establishing SA as one of Africa’s primary hubs for mobile money. Driven by expanded and more reliable network access, mobile money will be a key enabler of financial inclusion and a broad expansion of the digital economy and ecosystem. This will support the post-lockdown economic recovery.

• Kamenga is chief officer of MTN SA’s mobile financial services.