Why a Payments Infrastructure is a Critical Pillar to Africa’s Economic Transformation

“Sending money should be as easy as sending a photo.” 

Mark Zuckerberg

When Mark Zuckerberg, the Facebook CEO made this remark earlier this year at Facebook’s annual developer’s conference, he may not have realized that this has been a reality for millions of Africans for over a decade. It’s genesis, Kenya.

M-Pesa, Swahili for mobile money was launched in 2007 to offer Kenyans without bank accounts a platform to transfer cash via mobile phones. Today, you can use the network to issue and receive payments for goods and services, borrow and save money or even raise funds from friends and family. 

The GSMA 2018 report indicates that 45.6% of global mobile money accounts are in Africa. This translates to approximately 395.7 million accounts, out of a global total of 866 million. The report further projects there will be nearly 634 million mobile subscribers across sub-Saharan Africa by 2025 (52% of the population) and that every subscriber will have a mobile wallet. 

Africa’s payment landscape

The adoption of mobile wallets has steadily gained ground in Sub-saharan Africa, leading to the doubling of financial inclusion rates in countries such as Kenya, Tanzania and the Democratic Republic of Congo over the past six years.

One of the key impacts of this has been the creation of partnerships across banking, telecommunications, retail and other sectors to generate innovative offerings that enable individuals to grow small-scale businesses, make investments in schooling and health, and cope with emergencies.

This trend is set to consolidate further internet and mobile penetration continues to expand in this region, which also plays host to the world’s youngest population.

However, even with the bullish projections, nearly 90% of all payments and transactions remain cash-based in Sub-Saharan Africa. Issues such as cross- border payments and currency conversion continue to be major hindrances to the uptake of digital payments on the continent.

Despite Africa having the highest level of mobile phone and internet penetration, only 10% of all payments and transactions are based on technology. We need to make it easier for everyday Africans to conveniently access financial services and for customers and businesses to make and accept payments. 

Building Africa’s Payments Infrastructure

As an Africa-founded digital payments provider, Cellulant believes that infrastructure that leverages the penetration and usage of mobile phones is critical to growing economies in Africa. In fact, an interoperable payments infrastructure on the continent is a critical pillar. Many businesses and governments are held back by cumbersome cross-border payments that hinder the smooth flow of goods and services between countries and across regions.

The establishment of the African Continental Free Trade Area (AfCFTA) on 30th May 2019 is a step in the right direction. With 54 member states, the trading bloc aims to remove non-tariff barriers and refrain from introducing new ones in a bid to grow Intra-Africa trade.

An integrated payments infrastructure will create corridors for trade and intercontinental cooperation while driving economic growth and foster economic development. This is the main reason Cellulant has spent the last 17 years building a network of payment players across Africa. As a result, we are now able to provide digital payment options and digital financial services for everyday consumers and businesses seamlessly across the continent.

The opportunity to transform digital payments

Over the next 3-5 years, African entrepreneurs have the opportunity to transform the way businesses and consumers interact around money. We already have a great start; mobile subscribers are already at 500 million (and growing), internet penetration is at 26%.

Mobile money is now active in 31 countries in Africa with 84 million active mobile money accounts.  Mobile money transactions in sub-Saharan Africa could exceed $1.3 billion by 2019 according to data by the consulting firm Frost & Sullivan.

According to Africa Renewal, experts forecast the increasing number of mobile subscribers will inevitably lead to an increase in the mobile money market. Digital payments will become the norm rather than the exception.

A cashless Africa is definitely on the horizon.

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