Although tourism in emerging markets grew from 30 percent in 1980 to 45 percent in 2015 Africa has not enjoyed the same growth rate. This, according to ELIAS AAD, VP, Government Solutions Lead, Mastercard Advisors, is due to security and the lack of going cashless.
Over the last eight years, travel and tourism has grown by 17.3 percent in the top ten fastest-growing global destinations. This rate speaks to the rapid growth of tourism and how the industry, and an increasing priority for countries seeking for new growth opportunities. In emerging markets tourism grew from 30 percent in 1980 to 45 percent in 2015 and is expected to reach 57 percent by 2030.
Africa has not enjoyed the same growth rate, and although the continent offers a range of benefits, the sector remains largely an untapped opportunity. This is largely due to challenges facing the sector, including security concerns.
Recognizing the economic importance to mitigating the challenges was high on the agenda during the 2017 World Tourism Conference held in Rwanda earlier last year. Sector leaders discussed how to maximize opportunities and also reviewed the needs of the sector to reach its full potential.
The event was attended by tourism ministers from various African countries alongside tour operators, travel agents, hotels, airlines, some of the key private sector players. A set of challenges were identified and we broadly agreed that focusing on tackling them together, as industry leaders and the public sector, would make tangible differences to not only each of the African countries independently but also for the continent as a whole.
Easing of travel visa restrictions:
Current travel visa restrictions prevent even Africans from exploring their own continent. The ministers highlighted the complexity behind removing visas, especially considering that there are a number of factors, including security that needs to be considered. However, keen consideration and solutions as to how countries can circumnavigate the concerns around the need for travel documents will go a long way to feed into the decision to remove the need all together. By removing travel restrictions – particularly at an inter-African level – would boost the sector significantly.
Developing infrastructure that allows for easy travel
Lack of adequate infrastructure, whether air, road or water, makes it complicated to travel between destinations. One such example is a traveler trying to go from Kigali to Cape Verde – currently they need to take a number of connecting flights and routes – costly and a real issue for business travelers. As it stands, there is a critical need to further develop a strong airline and road network that connects African locations as well as consideration of smart ways to utilize existing infrastructure. This speaks to the importance of developing smart, connected, cities across Africa – technology will go a long way to boosting efficiencies that will have a long-term benefit on tourism.
Going cashless must be a priority for African economies
With 94 percent of retail transactions still in cash, there is a real need to displace cash given the countless benefits for consumers to shift behaviour. Additionally, benefits will benefit the sector and overall economy. Focus should be placed on:
· Safety: Digital payments is far safer, and although in Africa the need still remains to have some cash available, it is important to develop a wider acceptance network that includes hotels but also tourist hot spots.
· Customer experience: COMESA (Common Market for Eastern and Southern Africa) has launched a program called from Cape Town to Cairo, providing travelers with a full itinerary to travel from, to and in-between these cities. The initiative is helping to take the pain out of having to carry multiple currencies when travelling. The collaboration highlights the importance of similar initiatives, and a closer relationship between countries.
· Increased tourism spending: Hospitality providers and retailers benefit from higher footfall and greater purchase power from consumers given the ease of paying for goods digitally.
· Contribution to GDP growth: A Moody’s study showed that increased use of electronic payments added 0.8 percent to the GDP across emerging markets and 0.3 percent for developed markets. This was driven by; higher potential tax revenue; lower cash handling costs; guaranteed payment for merchants; a reduction in the grey economy due to lower unreported cash transactions; and greater financial inclusion.
The reality is that these seamless experiences will only be realized once sound infrastructure is implemented.
Africa phones go flat
Africa’s mobile phone market declined 2.1% quarter on quarter in Q3 2018 according to the latest figures from IDC.
The global technology research and consulting firm newly released Quarterly Mobile Phone Tracker shows overall shipments for the quarter totalled 52.6 million units, with feature phone shipments falling 2.7% QoQ and smartphone shipments declining 1.3% over the same period.
Transsion brands (Tecno, Infinix, and Itel) led the feature phone space in Q3 2018, with a combined unit share of 58.2%. Nokia was next in line with 11.7% share. Transsion, Samsung, and Huawei dominated the smartphone space with respective unit shares of 34.9%, 21.7%, and 10.2%. However, in value terms, Samsung led the smartphone market with 37.2% share, followed by Transsion (21.0%) and Huawei (13.0%).
There were differing fortunes in the region’s three major markets, with Nigeria suffering a heavy 11.6% QoQ decline in mobile phone shipments, while South Africa and Kenya saw respective QoQ growth of 8.5% and 7.9% in Q3 2018.
“The decline in Nigeria stemmed from a slowdown in government spending, ongoing warfare in the country’s northern states, and market uncertainty in the lead up to elections,” says George Mbuthia, a research analyst at IDC. “In South Africa, the market’s growth was spurred by the penetration of low-end devices from brands such as Mobicel, Mint, and Nokia, while the launch of entry-level smartphones helped drive growth in Kenya despite increases in taxes and fuel prices placing a significant burden on disposable income in the country.”
While feature phones remain steadfastly popular across Africa, particularly in more rural areas, consumers are increasingly being attracted by smartphone offerings from Chinese brands such as Xiaomi, Oppo, and Huawei, which are actively targeting feature-oriented customers at more economical price points.
“There is a new wave of Chinese brands aggressively pursuing growth opportunities in the region, while the more-established Huawei is also accelerating its marketing efforts and expanding its distribution budget,” says Ramazan Yavuz, a research manager at IDC. “These brands have quickly progressed along the learning curve and evolved their offerings to perfectly reflect the realities of the region by addressing the diverse pricing and feature needs of the consumer base.”
Looking ahead, IDC expects Africa’s overall mobile phone market to reach 58 million units in Q4 2018, spurred by the festive season and online consumer events such as Black Friday. The introduction of more affordable smartphones in the African market will help drive progress in this space over the coming quarters, while the share of feature phones will decline steadily as the transition to smartphones gathers momentum.
Mobile money to cross borders
Orange and MTN launch pan-African mobile money interoperability to scale up mobile financial services across Africa.
Two of Africa’s largest mobile operators and mobile money providers, Orange Group and MTN Group, today announced a joint venture, Mowali (mobile wallet interoperability), to enable interoperable payments across the continent. Mowali makes it possible to send money between mobile money accounts issued by any mobile money provider, in real time and at low cost.
Mowali will immediately benefit from the reach of MTN Mobile Money and Orange Money, bringing together over 100 million mobile money accounts and mobile money operations in 22 of sub-Saharan Africa’s 46 markets. Mowali is ready to enable interoperability between digital financial service providers beyond MTN and Orange operations and markets, to support the existing 338 million mobile money accounts in Africa.
Mowali is a digital payment infrastructure that connects financial service providers and customers in one inclusive network. It functions as an industry utility, open to any mobile money provider in Africa, including banks, money transfer operators and other financial service providers.
The objective of Mowali is to increase the usage of mobile money by consumers and merchants. Mowali enables money to circulate freely between mobile money accounts from any operators in all countries. From the customer’s point of view, this means “I can pay or receive money anywhere from my mobile account regardless of my operator”. The system will unlock further innovation in the digital financial space within the continent.
For Stéphane Richard, Chairman & CEO of Orange, “by providing full interoperability between platforms, Mowali will provide an important step forward that will allow mobile money to become a universal means of payment in Africa. Increasing financial inclusion through the use of digital technology is an essential element in furthering the economic development of Africa, particularly for more isolated communities. This solution embodies Orange’s ambition to be a leading player in the digital transformation of the continent. By joining forces with another of Africa’s market leaders, MTN, we aim to accelerate the pace of this transformation in a way that will change the lives of our customers by providing them with simpler, safer and more advantageous services. “
“One of MTN’s goals is to accelerate the penetration of mobile financial services in Africa, Mowali is one such vehicle that will help us achieve that objective. Furthermore, co-operation and partnerships that help us accelerate the pace of development and overcome some of the scale, scope and complexity of challenges that society faces are key. This partnership with Orange is therefore an important step in helping us play a meaningful role in supporting the United Nations’ Sustainable Development Goals related to eliminating extreme poverty and enhancing socio-economic development in the markets we operate in and beyond. Thus giving our customers access to a bright, digital future.” said Rob Shuter, Group President and CEO of MTN.
The GSMA supports the Mowali initiative as interoperability at this scale is a key accelerator for both financial inclusion and Mobile Money usability across Africa. “Today, there are over 690 million mobile money accounts around the world. Mobile money services have become an essential, life-changing tool across Africa, providing access to safe and secure financial services but also to energy, health, education and employment opportunities. The creation of Mowali will help to further transform mobile financial services throughout the African region. It demonstrates the mobile industry’s continued leadership and commitment to driving financial inclusion and economic empowerment through industry collaboration. The GSMA is proud to support its development,” said Mats Granryd, Director General, GSMA.
“Interoperability of digital payments has been the toughest hurdle for the financial services industry to overcome, in support of financial inclusion. With Mowali, Orange and MTN deliver a solution that will enable them, and other companies, to scale digital financial services across Africa, faster, to everyone—including the poor,” said Kosta Peric, deputy director of Financial Services for the Poor, at the Bill & Melinda Gates Foundation “This is a signal that a new wave of innovation, which can help alleviate poverty and drive economic opportunity, is coming. We’re pleased to see an implementation of Mojaloop—an open source payment platform available to operators across the sector—help achieve that.”