AFRICA: CROSS-BORDER A weighty moment: The Africa Continental Free Trade Area has profound implications for cross-border flows
Continentalshift Continental shift Vanessa Olver, Chief Enablement Officer at Absa Group, discusses African cooperation and the changing landscape for payments
Africa is a continent on the move. Bold steps are being taken to remove boundaries and promote economic integration, while mobile money is being adopted more enthusiastically than anywhere else in the world. And now, of course, COVID-19 is acting as a stimulus for further digital acceleration. Technology has been a driving force across Africa for a number of years; payments have been instant in much of sub-Saharan Africa since 2010. And when it comes to financial inclusion, it blazed a trail way back in 2007 with the launch of the M-Pesa mobile money service in Kenya. This created a mobile ecosystem that has expanded into every corner of the continent, spanning cultures and regulatory systems, so that nearly half of the world’s mobile money accounts held today are in Africa. Meanwhile, according to the United Nations Conference on Trade and Development, the number of online shoppers in Africa has surged annually by 18 per cent since 2014, while the GSMA, which represents mobile operators worldwide, says sub-Saharan Africa is mobile payments’ biggest market, www.fintechf.com
accounting for 45.6 per cent of all activity globally in 2018. “Well before COVID-19 boosted digitalisation, e-commerce and m-commerce were already on a steep upward curve in Africa,” points out Vanessa Olver, chief enablement officer for Absa Group, one of Africa’s largest providers of financial services where she has responsibility for operations and technology. “As a result, we’ve seen the growth of payments through initiatives such as digital wallets. Customers are beginning to use wallets to make payments for their everyday needs, which is a significant development.” Africa isn’t leap-frogging the paytech milestones laid down by the West, it’s carving out its own journey. “For the last decade, Africa has been a model of disruption,” says Olver. “Fintechs and mobile network operators have stepped in with new payment methods, fulfilling customer needs more quickly than commercial banks, and disruption is happening in Africa faster than in many other parts of the world.” Some of that now, sadly, is a reflection of the ‘isolation economy’ brought on by the pandemic. While COVID-19 underscores the need for social distancing, technology means people no longer have to come together physically, which, Olver says, is pushing payments further towards remote and contactless solutions. “In the next five years, big growth is predicted for e-commerce and m-commerce,” says Olver. “We’ll see
contactless, or low-touch, payments increase across Africa because of developments such as QR codes being scanned via smartphones. “We’re a youthful continent,” she adds, “which clearly plays a big part in the adoption of new and cool technologies. Africans like things to be instant and simple, but they also expect banks such as Absa to provide safety. They want fintech speed and last-mile delivery to be backed by the safety of a traditional commercial bank, and, of course, they want smartphone solutions.” Olver cites a McKinsey survey in Uganda that revealed there are more smartphones in that country than lightbulbs. “Just extrapolate that across the whole continent,” she says. “Cheap Chinese smartphones on the Android platform are what’s driving new tech and new types of payment. “People don’t have the patience to stand in queues or hang around malls. Instead, everyone wants stuff on their phones. Technology platforms are supporting SMEs that promote B2B and B2C commerce, and they are working with banks to build the entire payments backbone. In my view, much of the future is being invented in Africa.” Mobile network operators (MNOs) have an advantage over banks here because of their know-your-customer functionality. “MNOs can do KYC-lite,” says Olver, “while banks have onerous governance and control processes and can’t onboard as quickly for services such as digital wallets. The MNO advantage will become more apparent every day.” Issue 8 | ThePaytechMagazine
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