The long-anticipated wait is over.
Until this month, Nigeria did not operate a telecommunications (telco) company-led mobile money model, opting instead for a bank-led model that allowed only banks or licensed corporate organizations to operate a mobile money service.
But following a recent announcement from Nigeria’s Central Bank (CBN), mobile phone companies have been given the green light, for the first time ever, to operate mobile money services in the country.
Companies like Airtel Africa that have obtained the Payment Service Bank (PSB) license can now issue debit and prepaid cards, operate electronic wallets, accept cash deposits, and offer payment and remittance services to Nigeria’s 206 million-plus population, the largest on the continent.
“It gives us a completely new impetus into growing our footprint and our presence in Africa's largest economy [...],” Vimal Kumar Ambat, CEO of Airtel Mobile Commerce (AMC), told PYMNTS in an interview, adding that they now have a “clear path to double and triple our mobile money business across the continent with the opening up of Nigeria.”
According to Ambat, the Nigeria launch will accelerate its business roadmap, putting AMC, the holding company for several of Airtel Africa’s mobile money operations, in a position to explore a potential initial public offering (IPO) in less than three years. So far, prospects look bright, given the $500 million it has already raised through the sale of 18% of shares in the unit.
Partnering for Success
Competition in Africa’s mobile money market is intensifying with the entry of global players like Google Pay, Apple Pay and Samsung Pay, but Ambat said he is not fazed because in a one trillion-plus regional economy, “there is enough space for everyone.”
Moreover, Airtel has an edge over competitors that will find it difficult to replicate the company’s strong distribution network of close to 600,000 agents, 40,000 kiosks and about 14,000 Airtel Money branches across Africa that keeps money flowing between wallets, Ambat added.
But competition aside, he said that reinventing the wheel is unnecessary when there are other players leading in their fields, which is why a key part of the company's strategy has been to integrate Airtel with well-known African and global entities like Flutterwave, Western Union and MoneyGram.
Another player on Ambat's radar is Jumia Pay, the payments unit of leading Pan-African online marketplace Jumia, as he hinted at a partnership to integrate with the company “sooner rather than later.”
AMC has also teamed up with leading pan-African bank Ecobank, gaining access to Ecobank Pay’s network of about 40,000 merchants across the continent, while an integration with Mastercard’s QR code program has given the telco access to a wide network of small and micro merchants who serve most of Airtel's customers. The company recently announced another collaboration with the global payment provider this month, giving Airtel Money customers in Zambia access to a virtual card that can be used to make payments to online merchants like Amazon and Netflix that accept Mastercard.
According to Ambat, the deal removes one of the main limitations of the mobile money model, which is that it is very local and it can be challenging for customers to use their money wallets for international transactions.
Ultimately, Ambat said the company's goal is to become a marketplace where any customer, regardless of their affiliation to a telco, can have their financial ecosystem in their own hands and feel like they are part of the digital revolution.
It’s also the reason that it's key to operate a business that is “not tied down to a parent telco,” allowing the mobile money business to become “a fabric on which the whole digital ecosystem starts to run,” connecting the main banking ecosystem to the last customer on the continent in a completely digital manner, Ambat explained.
Super Apps Go Beyond Commerce
Unlike GrabPay in China or Paytm in India, most of the super apps — platforms that offer multiple services under one umbrella — proliferating across Africa, except for Safaricom’s M-Pesa service, have not been from mobile carriers. But Ambat said there is a need to be conscious of where African economies stand in terms of development, customers’ sophistication levels and how developed the infrastructure is compared to other regions.
He also pointed out that “a super app is not just about commerce,” explaining that putting a large amount of content in one location is only useful to those who have smartphones and are avid content consumers. And considering the low smartphone penetration rate on the continent now, he said the time isn't right to shift to a super app just yet.
Ambat remains optimistic, however, saying that as the continent develops, data prices drop and cheaper smartphones enter the market, the unstructured supplementary service data (USSD) technology will wear out and “super apps can become more relevant.”
The introduction of more cryptocurrency regulations into some of the region’s biggest markets also has the potential to accelerate the shift into a super app, he said, providing strong use cases that can be built around blockchain technology.
While waiting for that day to come, Ambat said there are gaps in the proposition offered to self-employed individuals – a large majority of employed people in sub-Saharan Africa – that he will be looking to fill next year. The strategy will be to “land a small business proposition” that will get the company to these micro-merchants, “start monetizing them and bring them into the formal digital ecosystem,” he added.