The future is on speed dial: Africa’s mobile-savvy societies are opening doors to the digital economy

September 29, 2020 | By Jorn Lambert

When it comes to integrating mobile technology into their lives, people in Africa are trailblazers. Annual mobile subscriptions in sub-Saharan Africa are growing at a clip of 4.6%, one of the fastest in the world. And with the world’s youngest population — nearly 60% of Africans are under 25 — more and more people will rely heavily on these devices and will continue to push for innovation.

This opens a world of financial opportunities for anyone who wants to pay or get paid, from the kiosk owner looking to digitize ordering to the parent looking to pay her children’s school fees to governments who want a simple and efficient way to disburse money to their citizens.

The impact of technology varies across the continent. More than half of North Africans already use smartphones and can see 5G on the horizon, with Egypt leading the way in digital payments, with Mastercard working with the Egyptian government to make its new administrative capital the country’s first integrated smart city.

In West Africa and sub-Saharan Africa, where feature phones are more common, 4G is gaining traction and mobile money is bringing people — and the services they need — online. But cash still dominates most transactions there. In some regions, people have often been unable to acquire bank accounts because they lack required forms of identification; obtaining driver’s licenses and passports often requires byzantine paperwork and long waiting periods. That excludes them from services many of us take for granted, such as shopping online or getting a bank loan to grow a business.

However, mobile banking has already begun to change all that. In 2007 in Kenya, Vodafone launched M-Pesa, an electronic mobile money service that enables customers to set up basic cash-in/cash-out accounts using their cell phone numbers as a form of identification. This model found strong support from governments across Africa, from helping implement mobile payment wallets for their citizens to digitizing disbursements. Today there are more than 445 million mobile money accounts in Africa and the Middle East — a lot more than bank accounts — providing access to digital financial services for more people than ever before.

Now, a second generation of mobile platforms is empowering Africans to pay merchants or individuals directly using their connected devices, be they smartphones or even feature phones. For example, last year, Airtel Africa, which operates in 13 countries, teamed up with Mastercard to deliver both virtual card number (VCN) identification and quick response (QR) code capability to 100 million consumers, as well as outfit about 100,000 merchants with the ability to accept QR code payments.

Another telco, Tigo, also worked with Mastercard to provide similar capabilities for its 14 million customers in Tanzania. In Zimbabwe, Mastercard and Econet’s EcoCash mobile money service launched a debit companion card to go with customer mobile accounts.

With each of these partnerships, more consumers have the option to order groceries or school clothes online from the safety of their homes — a crucial service in the coronavirus era.

Similarly, when consumers without credit want to purchase larger, more expensive items or services, such as a smartphone or solar power, they can use Pay on Demand. This Mastercard solution allows consumers to pay as they go directly from their mobile accounts or any card account using either Mastercard QR or Mastercard virtual cards.

In South Africa, two leading mobile networks, Vodacom and MTN, launched a service known as Masterpass, where customers can use a bank card to load up on more airtime or data for their mobile devices rather than running out to an ATM or store for vouchers. Aside from making people’s lives more convenient, the two telcos slashed airtime distribution expenses. And they could also point to Mastercard’s extensive security measures to ensure customers that their money was traveling safely, regardless of location. That’s essential for brands such as Vodacom and MTN who have built their reputations on trust.

By launching initiatives like these, telcos are not just helping communities but bolstering their own bottom lines. For one thing, offering customers a package of sought-after services will generate a robust revenue stream — something increasingly valuable as mobile subscriptions in Africa edge toward saturation.

In fact, nearly 9% of the sub-Saharan African economy comes from mobile technology businesses, including major telecom providers such as MTN, Vodacom and Airtel.

As young Africans guide their continent into a more connected era, digital doors into banking and payment choices will open. And Mastercard intends to keep doing its part. In 2020, we achieved our goal of bringing 500 million people into the digital economy over the last five years. Now we are aiming to reach 1 billion by 2025. And we will do this by focusing on what we always have: bringing all the key participants — telcos, fintechs and e-tailers — closer to their customers.

Photo of Jorn Lambert