Why are mobile wallets so important in Africa?
In the early part of the 21st century, Africa’s GDP grew by nearly 5% each year.
Produced in association with PPRO.
This GDP growth is being underpinned by a payments infrastructure that relies overwhelmingly on mobile wallets. But why mobile?
Although Africa’s leading economies are making progress laying a backbone for fixed-line internet, much of the continent still relies on mobile broadband to access the internet. This tendency is often described as ‘leap-frogging’, with the idea being that Africa has skipped over (or at least temporarily bypassed) older technologies to embrace their superior successors.
This trend is most evident in eCommerce and online payments, with financial institutions in Africa prioritising low-cost and accessible mobile payments and financial services, both as a means of promoting financial inclusion and as a route to commercial success.
Driven by the need to meet the unique challenges of the African market, African companies have been developing new products that are now seeing widespread adoption. For example, M-Pesa, a mobile phone-based money transfer, financing and microfinancing service, was originally developed by Vodaphone in conjunction with mobile network operators in Kenya and Tanzania.
The technology has since been expanded to Congo, Lesotho, Egypt, Mozambique and Ghana, and has made East Africa a hotspot for mobile payments technology.
Mobile commerce, driven by developments such as M-Pesa, is one of the key themes in African eCommerce. And in parts of Africa where the physical bricks-and-mortar shopping infrastructure is poorly developed, eCommerce – and m-commerce – is well-placed to fill the gap.
For eCommerce and payments providers who want to expand into the African market, this is a golden opportunity. But it is imperative that they first understand the payment cultures in their target market, and find the right local partners, in order to be successful.
PPRO’s ‘Payments and E-commerce Report: Africa & Middle East 2016’ is a resource tailor-made for merchants who want to succeed in African markets. It looks at the five fastest-growing and most promising eCommerce markets in Africa, breaking down trends, demographics and key statistics, in order to equip merchants with the knowledge they need to do business in Africa and the Middle East.