Kenya and Ghana have the highest rates of mobile payment use in the world after China and, ultimately, there could be as many as 850 million mobile payment users in Africa conducting transactions worth US$2.5tn to US$3tn a year, according to a report from the Boston Consulting Group (BCG).
The overall market across Africa is set to reach 650 million to 750 million customers and a transaction volume of US$14bn to US$20bn by 2025, the analysts predict.
Five Strategies for Mobile-Payment Banking in Africa states that mobile transactions in Kenya represent 87% of the country’s GDP, while in Ghana they account for 82% of GDP.
In other African countries, less than 50% of financial transactions are currently mobile payments but, the researchers say, these countries exhibit the underlying conditions required for substantial growth.
“African countries such as Nigeria and Ethiopia are now welcoming more investments in mobile services,” the report continues.
“Many African economies have strong and resilient fundamentals, including a young, fast-growing population and ongoing improvements in the business environment and governance.”
The African mobile payments market is dominated by telecoms companies. The report identifies the reasons for this as being that telecoms operators have been able to overcome regulatory hurdles, have the largest customer base, tend to offer lower fees, have broader agent networks and manage the mobile network infrastructure, while banks “typically focus on affluent customers, who represent perhaps 10% of the adult African population”.
It also highlights the strategies that banks can adopt to take advantage of the potential growth in mobile payments in Africa, including targeting unbanked or underbanked customers, developing innovative use cases that address customer pain points, and forming partnerships to create “a well-designed ecosystem” that supplements financial services with those answering needs in areas such as health care, energy supply and transportation.
“Leading retail banks could capture 20% or more of the mobile wallet market if they make the right investments and design their offerings strategically,” the report’s authors conclude.