One of the challenges that are faced by Afri-Commerce businesses is that a large segment of the African population is unbanked. According to the World Bank, 66% of the population in Sub-Saharan Africa are unbanked and therefore financially excluded from the economic ecosystem. This is due to high costs, paper work or even the distance to travel to traditional banks. However, based on the 2018 GSMA report, Sub-Saharan Africa’s unique mobile subscriber penetration was at 44% at the end of 2017 and predict that it will be at 52% by 2025.
Based on these two factors Sub-Saharan Africa has been in the forefront of Digital Financial Services (DFS), which is defined as “a broad range of financial services accessed and delivered through a variety of digital channels, including payments, credit, savings, remittances and insurance” (IFC Digital Access Report, 2018). DFSs have resulted in the increased number of those financially included in Sub-Saharan Africa, in this region more people are registered for DFS accounts more than traditional bank accounts, in some parts notably in East Africa and increasingly West Africa, mobile money has become a popular form of DFS.
“Mobile money is a type of electronic money (E-Money) that is transferred electronically using mobile networks and SIM-enabled devices, primarily mobile phones” (IFC Digital Access Report, 2018).
According to the World Bank Sub-Saharan Africa is home to all eight economies where 20 percent or more of adults have a mobile money account only. These countries are Burkina Faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe. The great thing about Mobile money is that it does not require a smartphone, the activities can be done from a basic phone.
Based on this information, the days when Afri-Commerce platforms could simply offer credit card, debit card or EFT (Electronic Fund Transfer) as payment methods are fast coming to an end. It is imperative for payment gateway service providers to enable alternative payment methods that include mobile money for Afri-Commerce platforms while ensuring secure transactions. Most importantly this solution should include mobile money interoperability which would allow different mobile financial services providers to interact with each other on Afri-Commerceplatforms. This will result in Afri-Commerce businesses gaining momentum in the Sub Saharan Africa market where according to the IFC digital access report, 43% of adults have a mobile money account.
Call to action is for Mobile Network Operators, financial intuitions, regulators and Afri-commerce businesses to collaborate and develop a digitally robust, interoperable, easy, secure and integrated payment method solution that is inclusive enough to serve the Sub-Saharan Africa Afri-commerce market.
Written by Tshiwela Ncube Co-founder and COO at Vuuqa
Vuuqa is an Afri-commerce platform that sells African brands by connecting them to the world.
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