In an article last year for the KPMG Perspectives website, Mogale cites research firm Business Monitor’s estimates, which indicate that Africa’s transaction value will hit US$85-billion by 2016, up from US$12-billion in 2011. The African Development Bank says annual consumer expenditure across the continent will reach US$2,2-trillion by 2030.
Mobile banking is well-suited to Africa, says Mogale. This is, in part, due to limited physical banking infrastructure and the high cost of expanding branch and ATM networks. “High cellphone penetration rates – paired with mobile banking and payments – could allow banks to catch up without building traditional banking and payments infrastructure,” he adds.
Kenya’s M-Pesa platform is often highlighted as the golden child of m-commerce in Africa, with more than 18-million cellphone users now subscribing to Safaricom’s mobile money platform. South Africa’s Vodacom recently relaunched its M-Pesa offering into its home market, working in conjunction with Bidvest Bank. Originally the telecoms provider paired up with one of the country’s big four banks, Nedbank, to launch the initiative in 2010. Then, only one million subscribers signed up; but now Vodacom is looking to secure 10-million subscribers within 10 years.
As Duncan McLeod, Editor of technology news website TechCentral, noted in an article last month: “According to Vodacom’s latest annual report, M-Pesa in Tanzania contributed nearly a fifth of the company’s service revenue in that market in the financial year to end-March 2014. The group has six million M-Pesa customers across its markets in Southern Africa. More than half of Vodacom’s customers in Tanzania use M-Pesa. In Kenya, Safaricom has over 18-million M-Pesa users, representing more than 70% of the East African nation’s adult population.”
Access to M-Pesa is the biggest shift in the relaunch strategy, with Vodacom now planning to ensure that the payment system is “available just about everywhere that consumers can buy airtime”, reported McLeod. “It plans to roll out the service to 30 000 retail outlets, both formal and informal, by year-end, [up] from about 8 000 outlets now. That’s orders of magnitude larger than at 2010’s launch.”
The urgency is also being heightened by MTN’s progress in the m-commerce space with its Mobile Money offering in partnership with retail chain Pick n Pay. As McLeod wrote: “Only time will tell whether MTN and Vodacom will be more successful. But the inevitable dogfight as South Africa’s two largest mobile operators scramble for dominance in a new market will undoubtedly propel innovation and benefit consumers as mobile phones become a platform for mass commerce.”
“Naturally, other African countries need to adapt the Kenyan model to their own needs, address crucial regulatory and security issues, and consider ways to build a Pan African framework to enable m-commerce to flow across borders,” Mogale noted.
While African countries adapt the successful Kenyan model to their own needs, the rest of the world is also seeing m-commerce kick up a gear.
For example, last month research firm ComScore noted that m-commerce in the US grew by 47% in the first quarter of the year, on the back of greater consumer use of tablets. Describing the growth rate as a ‘massive increase’, ComScore noted that the trend was outpacing retail growth (at just 3% up) and desktop-based e-commerce (which rose 10%).
Of course, noted the company’s Andrew Lipsman, at just 11,1% the total percentage of digital e-commerce, m-commerce remained a small – if growing – piece of the pie.
While the American market is being driven by tablet sales, a new study by Ericsson ConsumerLab pointed to the rise in urbanisation in emerging Asia as a major driver of m-commerce in the region. The study, which looked at m-commerce activity in Bangladesh, Indonesia and Vietnam, noted that 54% of respondents in Indonesia had used money transfer services, compared to 45% in Vietnam and 34% in Bangladesh. However, 97% of Bangladeshis were interested in using mobile payments. Respondents in Indonesia were less interested in m-commerce, with about 49% showing interest, and just 26% of Vietnamese felt compelled to go this route.
Over and above the impact of urbanisation, issues around convenience and the fear of receiving counterfeit cash were also prompting increased interest in the method of payment in emerging Asia. These are similar issues to those which resonate with consumers in Africa, and which speak to the continued roll-out and uptake of m-commerce services across the continent.