As the sound of the vuvuzelas fade into the background following the completion of South Africa’s World Cup party, the world’s eyes have turned to Africa’s rich economic potential.
The continent was the only global region other than Asia-Pacific not to slip into recession during 2009, and its economies are starting to become safer and better regulated (see Nigeria country survey: Making headway in Nigeria).
While the continent’s wealth of resources are well known, countries like Nigeria, sub-Saharan Africa’s biggest economy after South Africa, are starting to develop a more service-oriented economy. And hand-in-hand with economic progress comes the need for a solid and well-functioning payment infrastructure.
CI is focusing on two economies, Nigeria and Kenya, in this and its next edition – countries it expects to become focal points in the challenge to bring electronic payments to millions of unbanked people on the continent.
Card products across Africa have been available to too few people for far too long and the battle to replace cash has suffered as a result. In Nigeria, as our research shows, there are an estimated 300,000 credit cards, 26.8m debit cards and 8m prepaid cards in issue, a country with a population of 141m. Clearly there is room for improvement and the technology now exists, via prepaid cards and mobile phones, to allow hundreds of millions of people across Africa to gain access to basic financial services.
MasterCard expects the Asia, Middle East and Africa region to be generating an annual gross dollar volume of $146bn, compared to $156bn in Europe, $81m in Latin America, $15bn in Canada and $442bn in the US.
The challenge for prepaid and the traditional payments industry more generally in Africa is acceptance. There needs to be major investment for payment systems to be more efficient, but as has been seen in countries across the world, where electronic payments systems develop, economic growth moves hand in hand.
Another key player in developing Africa’s payment industry will be telcos. The breadth of mobile coverage across the continent suggests there is even an opportunity for the payments industry to leapfrog physical card acceptance and move straight to mobile payments. Mobile phone operators MTN, whose Mobile Money m-payments product now has more than 1m subscribers (mainly in Uganda), and M-Pesa, a Kenyan money-transfer service owned by Vodafone and Safaricom, are likely to be major players in this space.