With mobile money continuing to dominate the continent’s commerce growth, opening doors for business to everyone from a rural farmer to an entrepreneur, and cross-border seeing inter-country transactions on the rise, the continent is making a play to be the world’s biggest e-commerce opportunity.
According to Visual Capitalist, 13 of the world’s largest urban centres in 2 100 will be African, indicating the vast access to new markets – one which will be enhanced by dramatically different bandwidth and costs.
At a recent seminar held by TMT Finance, at the TMT Finance Africa in Cape Town 2019 event, four industry-leading panellists from PayU, Jumo, World Remit and MFSAfrica tackled the topic of how cross-border payments and remittances are exploding across the continent, unpacking five key transformations:
1. Mobile money
The continent’s adoption of transacting has developed faster than anywhere else in the world. Where previously it would take a day to visit the bank, withdraw and deliver cash, now it happens in a few seconds. “And with mobile money, we now have access to a farmer in rural Zambia – to suddenly get working capital for their farm. Mobile money made it widespread and created peer-to-peer transfer for customers, it is definitely possible to the payment system for Africa,” explains Martin Vogdt, Chief Product Officer at Jumo.
2. Global demand
High Velocity Merchants (HVMs), the fastest growing companies in the world, have woken up to the potential in Africa, as the likes of Taxify cement a foothold in Africa. Corrie Bakker, Head of Business Development and Strategy for Africa at PayU, weighs in: “The difference with these players is that they are looking for credibility and capability, a single entry point onto the continent. PayU has proven itself as the industry leader across emerging markets, and we have done the ‘hard yards’ building relationships in advance in East, West and Southern Africa, enabling these high-velocity clients to slipstream into the regional nodes.”
3. Cross border
As businesses build out, especially with neighbouring countries, there exists the opportunity to expand into new territories. Corrie adds, “Some clients want a multi-country payments partner, some want to focus on the whole region – East, West or South, for example – and the larger companies want to approach the continent. One of the challenges lies in the need to clear dollars in some of these countries, due to anti-money laundering regulations, so the forms are as complicated for smaller sums as they are for larger sums of money. ”
On the one side banks and regulators are starting to wake up and are becoming more sophisticated, tech-savvy, communicating more and adapting. But on the flip side, terrorism and anti-money laundering bring hurdles of their own, when dealing in dollars. “We did a survey not too long ago and found 55% of the users of our service between Uganda and Kenya are using it for business purposes; self-declared. But because both Uganda and Kenya needs to clear dollars, now we’re having to ask 200 questions for someone to say 100 dollars,” explains Dare Okoudjou, CEO of MFS Africa.
5. Financial Inclusion
The increasing number of solutions is driving down cost and delivering more options, allowing senders and receivers more choice. Originally, payments were dominated by card transactions and were largely bank driven but Fintech has introduced QR codes, Zapper, SnapScan, as a few examples, and, in addition, media platforms such as WhatsApp and SMS are helping customers to talk and transact more easily. Technology has also "increased the pot" significantly, bringing women and teens into the equation, driving financial inclusion, especially for the mothers and grandmothers in the household.