Investors in Africa’s digital payments primed for best future growth

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  • Mobile money use is increasing with consumers appreciating the advantages of mobile money.
  • User numbers are tripling in Ghana, quadrupling in Angola, and doubling in Nigeria since 2015.
  • Contactless transactions increased with Covid-19with majority now preferring mobile payments as a contactless alternative to cash. 

The payments landscape in Africa growing as consumer behaviour shifts across the continent. 

Digital payments have moved from being a nice-to-have solution for businesses to a necessity for consumers as the preference for digital payment platforms becomes their primary method of making payments. 

As Covid-19 was ravaging other sectors in Africa since it was announced in March 2020, the payments industry was evolving as consumers sought options that worked.

Read: Africa’s emerging ‘contactless economy’ creates new growth opportunities

Cellulant Kenya country Manager Faith Nkatha says that trends in digital payments pre and post-Covid have shifted to favour payment platforms offering the solution. 

In 2019, for instance, Cellulant processed US$5.7 billion worth of payments in Kenya alone. This accelerated in 2020 due to the Covid-19 pandemic where the company registered a 40 per cent increase. The company expects that the growth will hit 50 per cent in projections for the close of 2021. 

Cellulant Kenya country Manager Faith Nkatha. She says that trends in digital payments pre and post-Covid have shifted to favour payment platforms offering the solution. [Photo/Kenyan Wallstreet]
The growth witnessed in Kenya is reflective of the payments landscape in the rest of Africa. 

In the beginning, Consumers sought alternative digital payment methods as physical establishments were closed, and when they reopened, these methods provided safer payment alternatives in an effort to contain the spread of Covid-19. 

That is no longer the case as the shift in customer behaviour is strengthening digital payments adoption across several business sectors. 

For Cellulant, the rising number of merchant clients choosing digital payments means that the company has to develop new payment frameworks and expand relationships to meet this growing demand. 

Nkatha Gitonga notes that the increased demand for their services is due to the number of customers from e-commerce companies, airlines, e-commerce companies, online travel agencies, ride-hailing companies, online travel agencies, utilities, and telecommunications who are requesting more platform-style digital products and payment methods diversity. 

She added that Cellulant believes that growth in the payments technology space extends beyond the ease with which payments are made and received.  

The benefits of digital payments’ security and ease are crucial for the financial inclusion and economic empowerment of millions of people across Africa, empowering them to take the reins of development and transform the continent. 

An Ericsson report: Mobile Financial Services on the Rise notes that mobile financial services use in Sub-Saharan Africa (SSA) have more than tripled in six years. 

The report reveals that close to 50 per cent of all financial services consumers in 2021 in the SSA use mobile. 

Corroborating Cellulant’s growth assertions during the pandemic, the Ericsson report notes that the effect of Covid-19 on mobile financial services uptake saw 54 per cent of consumers saying they used mobile financial services more. 

Additionally, mobile financial services have become the preferred contactless alternative to cash with about 70 per cent being more positive to it since it is contactless. 

From the report, the trends in the coming days will even see more adoption of digital payment services. 

According to the findings, mobile money users will most likely increase their usage in the near future since transactions can be completed more quickly.

A Cellulant Tingg neighbourhood banking kiosk in Nigeria. Cellulant is one of the digital payments solutions providers in Africa. [Photo/Cellulant]
Nearly two-thirds of respondents said that faster transactions and increased security encourage them to use mobile money services more frequently.

Read: In Africa’s Fintech Revolution, traditional banks can still gain advantage

Eight out of ten people who have not used mobile banking services yet say they are “extremely interested” in doing so. 

Some of the key insights from the Ericsson report are: 

1. Mobile money use is increasing  

Consumers are appreciating the advantages of mobile money, with the number of users tripling in Ghana, quadrupling in Angola, and doubling in Nigeria since 2015. Approximately half of the consumers in the nations examined now do so with their phones. 

2. The contactless transactions increased with Covid-19 

As a result of the pandemic’s new standards, 54 per cent of customers report that they now use mobile money services more frequently now. Additionally, approximately 70 per cent now prefer mobile payments as a contactless alternative to cash. 

3. Communications service providers (CSPs) are still leading 

CSPs are the most common mobile money providers, accounting for up to 90 per cent of SSA mobile money customers. In comparison, providers like banks, remittance businesses, financial payment companies, and social media companies contact around three out of every ten mobile money users in the region. 

4. Users still trust CSPs more 

In the region, nine out of ten consumers show some level of trust in CSPs to provide services. Additionally, CSPs are connected with a higher level of trust than other types of mobile money providers, with trust serving as the primary driver of customer satisfaction among mobile money consumers. 

5. Time is money 

50 per cent of mobile money users believe that the most significant benefit of mobile money transactions is time savings. Consumers can avoid lengthy processes for remittances by using faster digital money transactions. This includes travel, queuing, and the transaction itself. Faster transactions would also encourage current customers to increase their use of mobile money services in future, either through increased use of digital transactions and/or simpler cash in and out visits to agents.

6. Benefits to society 

Mobile money is seen positively by  society. For example, over three-quarters feel that mobile money will lessen low-income people’s vulnerability to economic, social, and environmental shocks, as well as disasters, by assisting them with financial transactions. Additionally, 73 per cent view it as a catalyst for small and medium-sized businesses. This will assist them with bookkeeping capabilities, cash flow management and simple access to loans. 

The region’s growth potential is considerable, as seen by the large number of people who have not yet adopted mobile money services. Non-users account for around half of the region’s total addressable market. 

Their enthusiasm is great, with 4 in 5 indicating a strong desire in beginning to use mobile money services no matter the supplier, while only 2 per cent indicate no interest at all. 

Their enthusiasm is great, with 4 in 5 indicating a strong desire in beginning to use mobile money from any supplier, while only 2 per cent indicate no interest at all. 

There is substantial interest in mobile money services across numerous consumer categories — regardless of age, gender, socioeconomic status, being banked or unbanked, living in an urban or rural region, or having a smartphone or feature phone. 

There is substantial interest in mobile money services across numerous consumer categories — regardless of age, gender, socioeconomic status, banked or not, living anywhere or having a smartphone or feature phone. 

At least 80 per cent of consumers in each of these consumer groups exhibit a strong desire to begin using such services. The highest level of interest comes from individuals who have already banked.

Read: Mobile money stands strong in Africa 

I have 10 years of experience in multimedia journalism and I use the skills I have gained over this time to meet and ensure goal-surpassing editorial performance. Africa is my business and development on the continent is my heartbeat. Do you have a development story that has to be told? Reach me at njenga.h@theexchange.africa and we can showcase Africa together.

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