Dare Okoudjou, Founder and CEO, MFS Africa
Africa is gearing up to become of the great success stories of this century, with the continent set to have a larger working age population than the whole of Asia by 2100. This abundance of human capital holds huge potential to accelerate our economies and fuel business success and greater prosperity for everyone.
An early indicator of these possibilities is our fintech scene. EY estimates that sub-Saharan Africa’s fintech sector has grown by approximately 24% annually for the past 10 years and that the number of fintech startups has grown eight-fold between 2008 and 2018.
Yet this burgeoning fintech sector is not just a signal of future success – it’s also playing a key role as an enabler of growth, in the form of mobile money. Traditional banking has bypassed the majority of Africans, not addressing their needs or making it easy for them to access finance. There are only five bank branches per 100,000 people in sub-Saharan Africa, according to World Bank data, whereas there are over a hundred times as many mobile money agents.[1]
Make it mobile
By contrast, mobile phones are everywhere with penetration across the continent at 73%. These phones provide connectivity and routes to digital services, and mobile money providers such as M-Pesa have stepped in to give Africans what traditional banks have found it difficult to deliver. As a continent, we can now lay claim to nearly half of the global total of registered mobile money accounts, with nearly 400 million in total.
These accounts have brought financial services to a raft of groups who have been traditionally excluded from the system, particularly people in rural areas and women. Not only has this expanded payment options for people who might have a limited supply of cash, but it has also opened up new business models to, for example, financial services institutions who are keen to offer microloans and other forms of microfinance.
By moving people and businesses onto a formalised financial services platform, mobile money accounts create new and better quality data on how people use financial services. This creates a feedback mechanism whereby financial services organisations can garner a better understanding of traditionally under-served customers and can therefore provide them with better services.
The challenges of complexity
Yet mobile money is now pushing up against the limits of African technological and regulatory infrastructure. Our young and optimistic population is keen to drive new ideas forwards, to collaborate with people across the continent, and to do business without borders – 70% of African migration takes place between African countries. They require financial services that operate on similarly open and interconnected principals.
Unfortunately, Africa is beset by complex and fragmented financial services and systems. There are a variety of different digital payment schemes, each designed to meet the specific needs of one (or more) of 55 countries operating in a variety of languages and business cultures. Many of these lack the ability to communicate or inter-operate with other systems or across borders.
The impact of this uncoordinated complexity can be clearly seen in remittances. Fees are simply too high, and they inhibit the flow of money and services across the continent, acting as a drag on business activity and innovation. A Nigerian entrepreneur looking to launch, say, a pan-African ecommerce fashion brand that draws on the best trends has to contend with these obstacles when contracting a cutting-edge designer based in Gambia.
A different approach
When it comes to financial services, African businesses and indeed people should not be restricted by where they are from. Bringing down these barriers to the flow of finance will help unleash our potential, and it is this vision that motivated me when I founded MFS Africa. Having worked on mobile money across the continent while at MTN, one of the biggest telcos on the continent, I saw that the next step for mobile money would only come with bold moves, and at continental scale.
The idea was simple: a unifying layer that would connect different financial services to the vast array of telco providers and their mobile wallet systems. To work at a continent-wide scale, it would need to ensure that money could flow smoothly across different regulatory regimes and markets by also carrying out vital tasks such as authentication, credit checks, and know your customer processes.
We created our platform from scratch, working with telcos and financial services institutions to ensure it met their needs and making it inter-operable so that it would not be restricted to only working with a particular system. But it isn’t just the technology that needs to be adaptable to different approaches – we have also ensured that our team is, with a 70-strong (and growing) team on the ground across sub-Saharan Africa, feeding their in-depth local knowledge into our development.
With 200m users already covered, a reach of 34 countries, and 70 partners connected, we’re well on our way to fulfilling our long-term vision of connecting 400m people across sub-Saharan Africa and beyond, through their telcos, banks, money transfer operators and other partners. Mobile money can be the engine that drives Africa’s prosperity and enables us to be the home of the business successes of the 21st century, and we’re excited to be taking on the challenge.
