Emerging markets, those nations who have a physical financial infrastructure including banks, a stock exchange and a unified currency and whose economy is progressing, offer lucrative opportunities for mobile payments. Especially in East Africa, where mobile payments have gained unparalleled traction for businesses that offer travel bookings, online purchasing, loan payments, or even for consumers who send money to friends and family, emerging markets offer a blue ocean market that begs to be tapped.
There are several reasons why mobile payments and the emerging markets of East Africa are a well-suited match:
- Mobile Penetration: Over 70% of Africans have mobile phones.
- Bank Underavailability: Brick and mortar banks are inaccessible to most of the African population.
- Convenience for Consumers: For payments, transfers, and other banking needs, consumers can easily take advantage of the technology that is always with them: their mobile phones.
- Opportune for Businesses: For businesses, setup is quick and easy, they can accept payment away from their primary place of business, and conversion rates are five times higher than credit card transactions.
- Heightened Security: mobile payments in East Africa have security functionalities that provide authentication capabilities and passwords and GPS functionality add layers of security that are not present in standard payment processing options.
Leading East African Emerging Markets
According to Forbes’ “Africa’s Emerging Market Boom,” Africa is currently home to five of the world’s fastest growing economies. Considering that mobile payments were first launched in East Africa around 2008, the growth they show in these emerging markets is tremendous:
Tanzania is home to 48.5 million people. In this nation, there are 31.8 million registered mobile money accounts. In one month (September 2013), the total value of mobile money transactions was 2.8 trillion Tanzanian Shillings (which converts to roughly 1.6 Billion US Dollars).
Kenya leads the world in mobile payments with over two-thirds of the adult population there now using their phones to pay for goods and services. 25% of the country’s GNP flows through mobile money systems like M-PESA.
Uganda has a competitive mobile telecommunications landscape. But, with less than 20% of its population holding a traditional bank account or internet connection, mobile payments, mobile money transfer, and mobile banking are a way of life.
Rwanda is demonstrating a robust national economy, with a GDP that has maintained an annual growth of 7 – 8% since 2008 and increased penetration particularly evident in the internet and mobile sectors. As of March 2014, the mobile market penetration rate in Rwanda is 65%.
Mobile Payments in East Africa: The Future
In recent years, African countries have recorded some of the highest economic growth figures in the world, and for them, the technology of the future creates openings for success in realms like mobile payments. Africa is gaining global prominence for disruptive innovation within a number of fields, most of which center around mobile connectivity.
In January, Kenya’s President, Mwai Kibaki, launched an ambitious USD 9 billion technopolis described as “Africa’s Silicon Savannah,” and immediately three international mobile-handset manufacturers had expressed interest in moving their chip-making businesses there. IBM Research has set up its first African science and technology lab in Nairobi.
East Africa’s best and brightest minds are preparing themselves for the surge in growth, in devices, in internet and mobile penetration and the demand for local content and solutions.
The market is ripe for mobile payment solutions that offer efficiency for the emerging markets of Tanzania, Kenya, Uganda, Rwanda, and all of East Africa.
Eran Feinstein is the founder of 3G Direct Pay Limited – a provider of global e-commerce and online payments solutions for the travel and related industries He is a leading authority in the fields of online payments, e-commerce and travel, having acquired extensive experience from various parts of the world.
Tags: Technology, M-Pesa, mobile banking, Mobile payment, mobile technology