Three years after Safaricom launched its pioneer m-Pesa service in Kenya, African operators are still world leaders in the provision of mobile money services. The seemingly simple service, allowing unbanked people to transfer money by text, has allowed countless ordinary people to send money to their loved ones and business partners without hassle, while providing Safaricom with a unique tool to improve customer loyalty. The service was so successful that backer Vodafone launched it in Tanzania, Afghanistan, and announced last week that Vodacom was to launch it in South Africa in partnership with a local bank.
More operators have joined the trend. In January this year, Zain became “the biggest mobile commerce operator in the world in terms of geographical coverage”, by extending its Zap service to Malawi, Niger and Sierra Leone (after starting in Kenya, Tanzania and Uganda). Orange is also addressing the market, with its Orange Money service in West Africa. In North Africa, Maroc Telecom launched MobiCash last month, and Egypt-based group Orascom is partnering with Western Union for a mobile money service.
It is not only large operator groups ‘banking’ on the market: small, Africa-based companies are providing services which could shake up the offer of financial services to consumers. Two interesting examples are to be found in West Africa. Moneyboxafrica, based in Nigeria, is a new savings and payment system based on a scratch card and enabled by any mobile phone. In Sierra Leone, Splash Mobile Money allows clients using Zain, Africell and Comium networks to send money to other mobile users by registering to the Splash system. The Managing Directors of both companies (Adeniyi Elumaro of Moneyboxafrica and Michael Foley of Splash) will join the Mobile Money Panel at the forthcoming West & Central Africa Com congress (Dakar, Senegal, 16-17 June) and will discuss their visions of how to deliver on customers’ needs for better banking services.
The subject of mobile money will feature prominently in some events of this year’s Com World Series. A special session is to be dedicated to the subject at the leading pan-African event AfricaCom, with presentations and a panel discussion from operators, solutions vendors, financial institutions and regulators. In the Middle East event (Dubai, 30th November – 1st December), the topic will be covered as part of the value-added services stream, looking at the mobile money opportunity in markets where needs are different from those found in Africa: on the one hand, mobile money transfer is a valuable service for the large immigrant workforce wishing to send money home to their families, while on the other hand the high end of the customer base will be looking at more advanced m-commerce services. At Americas Com (Rio, Brazil, 30th June – 1st July), a panel discussion will address the challenges and opportunities for the mobilization of payments and remittances in Latin America.
The discussions will certainly cover how the services are adapted to different market conditions, regulatory environments, and distribution networks. It will be interesting to see if and how mobile money services will evolve from simple money transfers to more advanced mobile commerce services.
22 Feb 2010
As Bharti tries another move into Africa, is the Indian operator business model transposable there?
Outsourcing, managed services, and more generally cost-reduction strategies have been major areas of interest in African telecoms markets in the past couple of years, as the decline in ARPU levels started to have a impact on revenues which was not compensated as much by the organic growth experienced until then. African operators began to work on their costs and look more closely at their margins rather. At last year’s AfricaCom congress, Zain Africa’s Chris Gabriel gave a keynote speech in which he presented the key points for a sustainable business models: scale and efficiency were at the top of his list, and most operators investing in Africa would have agreed.
Indian operators are renowned for business models that excel at optimising scale and efficiency, in order to achieve strong margins in very low-ARPU markets. The “Indian model” has been praised as the champion of emerging markets, and it is no wonder that it is often mentioned as one to emulate in Africa. Indeed, a number of Indian companies have been trying to enter the continent, with Essar in East Africa, Tata in South Africa and, as announced this month, Bharti in talks with Zain group to buy its African operations. The move would make sense, as Bharti would bring its knowledge of low revenue markets to operations which need a shake-up. In particular, it could develop interesting value-added services, for example on the content side. I met an Indian VAS vendor who was talking enthusiastically about how mobile content is driven by the same two obsessions in India and Africa: music and sport (although the sports people are so passionate about are different: cricket in India and football in Africa).
But is it as straightforwad as it sounds? Talking about the Bharti-Zain news with participants at Mobile World Congress last week, I heard some questions about how easily Bharti could work its magic in Africa. The company has limited experience of the continent - or indeed of any market outside India – and working cultures are very different. In India, Bharti can count on a relatively well-trained workforce, which will be harder to find in some African markets, unless it brings in its own staff. In addition, it would be unfair to say that Zain hasn’t attempted the so-called Indian model in its markets, outsourcing key areas to reduce costs and concentrate on selling services. But the group’s efforts haven’t been as rewarded as its backers hoped for, and some of its operations have amounted huge debt.
Changing business models, and the new ownership trends in Africa’s telecoms markets, will certainly be key topics of discussion at this year’s African events in the Com World Series. We are currently drafting the programmes for the new NigeriaCom event in Lagos in September, and for the annual AfricaCom in Cape Town in November. Now is the time to get in touch and give your input.
Indian operators are renowned for business models that excel at optimising scale and efficiency, in order to achieve strong margins in very low-ARPU markets. The “Indian model” has been praised as the champion of emerging markets, and it is no wonder that it is often mentioned as one to emulate in Africa. Indeed, a number of Indian companies have been trying to enter the continent, with Essar in East Africa, Tata in South Africa and, as announced this month, Bharti in talks with Zain group to buy its African operations. The move would make sense, as Bharti would bring its knowledge of low revenue markets to operations which need a shake-up. In particular, it could develop interesting value-added services, for example on the content side. I met an Indian VAS vendor who was talking enthusiastically about how mobile content is driven by the same two obsessions in India and Africa: music and sport (although the sports people are so passionate about are different: cricket in India and football in Africa).
But is it as straightforwad as it sounds? Talking about the Bharti-Zain news with participants at Mobile World Congress last week, I heard some questions about how easily Bharti could work its magic in Africa. The company has limited experience of the continent - or indeed of any market outside India – and working cultures are very different. In India, Bharti can count on a relatively well-trained workforce, which will be harder to find in some African markets, unless it brings in its own staff. In addition, it would be unfair to say that Zain hasn’t attempted the so-called Indian model in its markets, outsourcing key areas to reduce costs and concentrate on selling services. But the group’s efforts haven’t been as rewarded as its backers hoped for, and some of its operations have amounted huge debt.
Changing business models, and the new ownership trends in Africa’s telecoms markets, will certainly be key topics of discussion at this year’s African events in the Com World Series. We are currently drafting the programmes for the new NigeriaCom event in Lagos in September, and for the annual AfricaCom in Cape Town in November. Now is the time to get in touch and give your input.