Malawi has taken a significant step towards creating a digital payment ecosystem in order to address poverty and drive inclusive growth.
An event organised by the Government of Malawi, with the United Nations Capital Development Fund’s (UNCDF) Better Than Cash Alliance (http://www.betterthancash.org) and Mobile Money for the Poor initiatives, brought together digital payments players to accelerate the progress of digital finance in Malawi. The convening also marks the release of an in-depth analysis of the country’s readiness to transition from a nearly cash-only economy to one where digital payments are widely available through an ecosystem approach.
Minister of Finance, Economic Planning and Development Goodall Gondwe said that the transition to digital payments is part of the Government’s commitment to achieving social and economic goals within the Malawi Growth and Development Strategy.
“This is part of our mandate to realise balanced and sustainable economic growth and to reduce poverty,” said Gondwe. “We believe creating an economy where digital payments are widely available is the right path for us to embark on and we are doing so based on sound economic and fiscal policies.”
The research was conducted through a partnership between the Malawian Ministry of Finance, the Reserve Bank of Malawi, and the Better Than Cash Alliance, and is entitled The Opportunities for Malawi’s Transition Away from Cash (http://betterthancash.org/wp-content/uploads/2015/04/BTCA-Long-Version-Malawi-Diagnostic.pdf). The report detailed the current state of Malawian digital payments, providing an important baseline to track progress. The study also identified four potential opportunities for Malawi, including the Government advancing on digitizing its centralized payment system with support from banks, and merchants accelerating digital payment acceptance via mobile money and debit card at the point of sale.
“Malawi is moving forward to build a strong digital ecosystem that will respond to the needs of the people in the country,” said Tillman Bruett, Advisor and Programme Manager, Mobile Money for the Poor (MM4P), a UNCDF initiative, undertaken in Malawi with the support of the US Agency for International Development. “We expect that as a result, Malawi will progress from 3.5 percent of total active adult population using digital financial services at the start of this year to 15 percent by 2019.”
As part of the programme, UNCDF plans to provide technical and financial assistance to build capacity in public and private sector organizations to support the switch from cash to digital for the most promising payments streams identified in the research.
Making payments in cash can be expensive and inefficient for governments, companies and international organizations. Cash is also difficult to trace, and extremely vulnerable to theft and loss. Many people living in poverty only use cash, and this is a key barrier to broader financial inclusion because cash makes it costly to provide financial services. According to UNCDF, in least developed countries such as Malawi mobile penetration is at 30 percent while access to a bank account is at 14 percent. Mobile payments can therefore be one way to accelerate this shift.
Malawi’s approach can set an example for other countries in the early stages of transitioning to digital payments.
“Digitisation is an important development tool for many countries looking to reduce the cost of delivering payments, increase transparency and increase access to financial services for citizens,” said Dr. Ruth Goodwin-Groen, Managing Director, Better Than Cash Alliance. “By undertaking this research and by using it to plan its shift, Malawi has taken a bold step in increasing transparency and moving towards an economy where the Government, businesses and people can pay and get paid electronically.”
Transitioning from cash to digital payments is a complex process, however, and requires collaboration between the government and businesses, as well as building trust and increasing familiarity among citizens. That reality is why leading figures came together today to discuss the diagnostic data and develop a blueprint for the country’s digital payments future. Participants noted that by working collaboratively to address the barriers to transitioning payments from cash to digital, they would be able to accelerate the shift and ensure that it brings real benefits to citizens in the form of greater financial inclusion.
USAID/Malawi Mission Director Doug Arbuckle noted in his remarks: “The U.S. Government is glad to join many other governments and international organizations in encouraging a transition away from cash to digital payments in Malawi. This can be a long road, but the benefits are clear and overwhelming.”
Mia Seppo, United Nations Resident Coordinator and United Nations Development Programme Resident Representative, added: “The introduction of digitisation is timely as Malawi is currently going through public service reforms that will ensure equitable access to financial and payment services in a manner that is transparent and efficient.”
Malawi is a focus country of MM4P and member of the Better Than Cash Alliance.
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.”