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Mobile money is helping Airtel Africa and its rivals bounce back from Covid-19

A customer conducts a mobile money transfer, known as M-Pesa, at a Safaricom agent stall, as he holds Kenyan shillings (KSh) in Nairobi, Kenya October 16, 2018.
Reuters/Thomas Mukoya
Mobile money is providing a much-needed revenue buffer against Covid-19 disruptions for Africa’s big telecoms companies, such as Airtel Africa, MTN and Safaricom.
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Mobile money is providing a much-needed revenue buffer against disruptions from the coronavirus pandemic for Africa’s big telecoms companies, such as Airtel Africa, MTN and Safaricom.

This was evident in the financials for Airtel Africa, which reported this week that revenue from Airtel Africa Money had rebounded from a dip in the initial phase of the pandemic, growing 38.7% in the last quarter. The segment also contributed over 10.6% of the group’s revenue in this period. Airtel Money (Airtel Africa’s fintech arm) offers mobile wallets which allow holders to perform financial transactions on their cellphones.

The company’s recent $100 million investment partnership with Mastercard will help it expand its mobile money business by allowing for new functionalities, such as linking up mobile money wallets with credit cards. Apart from card issuance, the partnership will also facilitate broader payment processing for cross-border transactions through the utilization of a payments gateway run by Mastercard.

The global payments company will snap up a minority shareholding in the mobile telco’s fintech unit after its financial investment, which will be used to offset some debt and to further expand its network. After settling these obligations, Airtel Africa intends to sprint forward in the mobile money sector, with executives seeing minimal impact from resurgent coronavirus cases across the region.

Such fintech partnerships look to be the next frontier of growth for mobile money in Africa.

Some are making a foray into mobile remittances, which are proving steady for many African economies. The World Bank said this month that remittance flows to sub Saharan Africa (excluding Nigeria) increased by 2.3% in 2020. With Covid-19 restrictions, mobile receipts played a significant role as delivery channels, especially with platforms such as EcoCash in Zimbabwe, M-Pes in Kenya, and others partnering with remittance companies for money to be transferred directly into mobile wallets.

MFS Africa is another example. With its 320 million connected mobile wallets across Africa, it has been signing partnerships to enable cross border payments between small to medium-sized businesses, and also allow for the interoperability of mobile money platforms across the Africa region.

Mobile money has also been particularly important for MTN’s fintech unit, which has a heavy presence across Africa, and which registered an increase of 200,000 users to a total of 46.6 million during the quarter to end March 2021. The number of active merchants accepting payments through MTN’s mobile money platform doubled to 521,000 over the quarter period under review. The total value too for mobile money merchant payments has grown 299.2% to $4.8 billion for MTN alone, it said in its quarterly financials.

Mobile money operators across Africa have suffered disruptions and financial impacts from the pandemic. In Kenya, M-Pesa was asked by the government to reduce transaction fees for its platform temporarily to promote the uptake of digital finance platforms in light of restrictions on movement as a result of Covid-19. The impact of this was remarkable for the Safaricom and Vodafone-owned mobile money service. Revenue declined 2.1% on a year-on-year basis for 2020, despite the company growing its Kenyan customer base growth 13.6% to 28.3 million.

Still, M-Pesa remains a bright spot for Safaricom, accounting for 33% of service revenue, compared to a 38% contribution from voice and short message services, Safaricom said in its financials for the year ended March 2021. Moreover, it also said the value of mobile money subscriptions for the period has significantly risen by 86.6% to $53.2 billion on a year-on-year basis.

Airtel Africa is exploring listing its mobile money business within four years. “The combination of bringing connectivity to under-penetrated mobile markets and improving financial inclusion through banking the unbanked provides us with a sizable, sustainable, profitable growth potential,” the company said in its financial statement.

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