Dear Reader,
What is the relevance of Mobile Transfers of Value in Africa? The Corporate Council on Africa's 8th Biennial Summit on US-Africa Trade was not focused on this issue, and yet it relates to so many of the types of consumer and business opportunities that were being addressed here last week in DC.
That said, we turn to some recent evolutions of m-payments applications for utilities payments in Africa and elsewhere have brought to the market.
Mondato is at the convergence of the public and private sectors where financial, mobile, and online value transfers (money, airtime, bill payments) meet.
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Mondato's custom research department will look to answers you can use in planning, revamping or otherwise addressing business questions related to remittance and mobile transfers of value. Wherever your geographical interest, reach out to us to learn more about how we can help: info@mondato.com.
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In this issue:
The notion of mobile payments for utilities has long been listed as one of the benefits of such a platform. However, we were interested to look at where this is actually happening and how some models have been put into action.
Investment in Africa and the Role of Mobile Solutions
Viewed from a broad perspective of seeking to increase US-Africa trade across a variety of industry areas, the Corporate Council on Africa’s 8th Biennial Summit last week, didn't make much explicit mention of the impact of mobile value transfers. But it was nevertheless present as an undercurrent in how business leaders see the convergence of mobile and financial services in emerging markets and in relation to their particular business focus.
Mobile Payments and Prepaid Utilities
The notion of mobile payments for utilities has long been listed as one of the benefits of such a platform. However, we were interested to look at a few examples of where this is actually happening and how some models have been put into action. There are clearly a number of examples of tie-ups with existing utility entities in well-supplied urban settings both in developed and developing country scenarios. But there have also been announcements over recent years for solutions appropriate for rural settings where such utilities may be arriving for the first time and have to function in an otherwise off the grid situation.
Qatar, Cameroon and Columbia (Missouri that is)
In Cameroon, as of July 2011, mobile payments for electricity, empowered by Orange Money were made available. [1] There are at least six African countries where it is possible to make such payments to established utility entities. In Qatar, the government has enabled mobile utilities payments and similarly in places like Columbia Missouri such payment mechanisms have been set up for water bill payments. These are what we call adaptive solutions, in that they provide another payment facility for an existing utility structure. They may even introduce massive efficiency into the payment process (particularly in developing settings such as Zap for water in Dar es Salaam Tanzania [2] or Celpay in Zambia for multiple utilities [3], but they do not ultimately shift the paradigm of utility delivery.
Shifting the balance entirely means bringing power, water, or other basic utilities to places the infrastructure has not and likely will not reach for the foreseeable future. Just as the ability to send money via a mobile phone has come to some such places, extending out to the phone as a payment device for newly implanted and innovative utility services has the power to transform.
Rural Development Is Empowered
For example, in Kenya one rural solution being implemented is the Grundfos Lifelink system which incorporates individual M-PESA accounts to transfer funds to get water credits. [4] A key fob is credited and can then allow a user access to water at the pump. Elsewhere, in Senegal and Mali mWater a program of Manobi [5] has set up pilots for water distribution and cost recapture.
In locations where the electric grid is unlikely to have any impact for many years if ever, small electric battery “boxes” recharged at central solar stations were introduced in Rwanda by an organization called Equinox ( www.e.quinox.org). These power projects create a small solar recharge station for batteries where local villagers can come to exchange a spent battery for a recharged version for a nominal, and yet business supporting, fee. The station supposedly recoups its initial costs in two years or less. Providing rural electricity through such projects could potentially be made more secure (less risk of issues with cash handling and fraud) through incorporation of mobile payments in their pay-per-recharge model.
The Power of a Good Shirt
Looking even further into the future, there are more interesting innovations that are likely to only be the harbingers of what is to come. One such invention is the TUME by NOS Design in Mexico. [6] Not yet in actual production, this is a base station and access devices for prepaid electricity. When contacted, the design company representative indicated that this award winning design is in fact currently seeking potential investors. Looking even further out on the new-tech wave we find a t-shirt, trialed at a music festival that uses sound waves to create electricity and charge mobile phones. [7]
Investment in Africa and the Role of Mobile Solutions
This newsletter has covered the development of the African mobile financial sector on numerous occasions, reflecting on the emergence of innovative business models and services throughout the Continent, and the associated increase in commerce and economic activity realized as a consequence thereof. We take a moment in this edition to expand our coverage of Africa to international trade and macroeconomic issues, which relate to and influence (and are influenced by) Africa’s mobile financial ecosystem.
The Corporate Council on Africa (CCA) recently held its now 8th Biennial US-Africa Business Summit in Washington, DC. The CCA, which seeks to increase trade and investment between the United States and Africa, adopted a conference agenda focused on sectors attracting strong business interest, including agribusiness, energy, power, health, goods and services, security and infrastructure.
Leaders from public and private sector organizations convened to examine investment paths and strategies that serve to enhance the mutual benefit of African economies and international investors. High-ranking officials from several African governments were on hand to make the case for investment in their respective markets. White House Chief of Staff William Daley and Senators Chris Coons and Johnny Isakson also made appearances, each delivering a strong message of support for increased engagement between the US and Africa.
On the sidelines of the formal conference sessions, many of the delegates could be seen engaging old and new acquaintances on a wide range of business topics and opportunities. Many of the conversations around the room focused on how to drive improvements in infrastructure and power, emerging areas of investment focus. Both have been perennial problems in the region, and the challenge of ensuring returns in these markets, which require high economies of scale to achieve profitability and have historically been heavily regulated and dominated by the public sector, were frequently cited as barriers. The rapid growth and mass adoption of mobile phone networks over the past decade, however, has demonstrated the ability for successful investment in infrastructure and may serve as the blueprint for the development of other areas of the infrastructure and power sectors.
The success of the cellular industry has had far-reaching effects, namely in the areas of mobile money and health solutions. In Kenya, for example, a country at the forefront of the mobile money market, 90% of adults have a mobile phone and about 20% of the country’s GDP last year was transferred via mobile money payments, for a wide variety of services including electricity, school fees, and salaries.
The ease of initiating, accessing, and using mobile money solutions create an entry point for the ‘unbanked’ segment into the financial services industry, and has served as a pathway to banking, insurance, and other financial products for which they would not previously have been strong candidates. As investment continues and economic growth creates demand for new services, the potential exists for mobile payment and other mobile services to play a key role in providing solutions and delivery mechanisms.
Some of the Summit attendees were seeking out advice on how to tackle a particular sector or market at a practical level, others were on the look-out for strategic or financial partners, while others still were looking to mark and build-on successes they had realized in the African market place.
A theme common to the conference sessions and corridor discussions was that Africa had overcome many of key structural and environmental challenges that had stifled its past growth and development, and was now in the throes of a new economic chapter, characterized by fast economic growth and expansion. The emergence of a middle class, urbanization, and strong outside interest in African commodities has created strong demand for goods and services on the continent.
Combined with deregulation and reduced barriers to conducting business, Africa is increasingly a prime opportunity for foreign direct investment, promising to benefit both African economies and investors. Unlikely to be forgotten is the role that mobile transfers of value and all forms of mobile financial services will play in this future.
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