More or less competition in African mobile payments sector?


More countries may enter the mix of players – but at the platform level, competition may have stagnated

As we reported last month, the mobile payments sector is going gangbusters on the African continent.  Kenya is ahead of the game, but other countries are closing in.

Kenya itself is considered by many to be at the forefront of the African mobile-payments universe, with its M-Pesa mobile-currency system often touted as the most developed mobile-payment system in the world.  The Economist asked rhetorically: “Why does Kenya lead the world in mobile money?”, pointing out that roughly 25% of Kenya’s GDP flows through the mobile service, with over 17 million users in Kenya alone.  The WorldBank has commented that “Mobile payments go viral [with] M-PESA in Kenya.”

Earlier this week, South African media outlet Business Tech published an interesting comparative piece on the issue, entitled “Africa leads in mobile banking“.  The article shows (also graphically, see below) how  and South Africa are close rivals to the Kenyan leadership in the mobile payments industry:

Image credit: Business Tech

What triggered the article is the release of the MEF-Africa report on mobile payments on the continent, which provides much of the content of the Business Tech piece.

One of the key developments highlighted is that M-Pesa’s platform may soon see a major upgrade in South Africa (where it is run by Vocadom and Nedbank), according to the article, linking the system directly with the brick-and-mortar banks’ platforms.  This may either (1) cement the relative market dominance of M-Pesa or (2) spur further innovation and enhance the overall competitiveness of the still rather young industry.

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