Mobile money services offer an inexpensive and convenient way to bridge the gap between the banked and unbanked. And the African continent is the perfect place for its application. Not only is it one of the fastest-growing mobile phone markets in the world, it’s also home to significant populations of unbanked people.
In southern Africa, the growth of the mobile payments sector has been quite steady. Take for example in Botswana, where the is particularly significant. Botswana is ranked higher than countries like Kenya and other East African countries on mobile telephone density. According to a FinScope Botswana survey, more than half of Botswana’s population remained unbanked in 2019 but a little over half of the population relied on mobile payments. Mobile money provision has been growing rapidly in Botswana, and findings in the Bank of Botswana 2014 Annual Report, note that the number of mobile money transactions jumped from around 5,000 in 2010 to more than 1.1 million in 2018.
Mobile money payment boasts a transaction value of about $559.8, according to market insights by Statista. It also notes that the total transaction value in the digital payments market is projected to reach $950 million in 2023. It further indicates that the total transaction value is expected to record an annual growth rate of 12.9%, which would result in a projected total amount of $1.5 billion by 2027.
What led to the rise of Mobile Money in Botswana?
So what is driving growth in the mobile payments market, one would wonder? Well, the same reasons that digital payments are a hit around the world:
- The convenience and speed.
- Increased digitisation of business, which has led to growing demand for digital payment solutions that streamline transactions and reduce costs.
- The rise of e-commerce and online marketplaces has led to the demand for secure and efficient payment systems.
- The restrictions of the COVID-19 pandemic have led to a surge in mobile payment usage because people prioritize their health safety and hygiene.
Most, if not all banks in Botswana, FNB, ABSA, Access and Stanbic, have also developed operational mobile money transfer service platforms in Botswana. This has opened the door for a number of joint-venture opportunities for mobile service providers and banks.
The two main joint ventures providing mobile money services are Mascom’s MyZaka and Orange’s My Money, with the latter being the more widely adopted. However, given the rapid growth of the sector and population growth, it is clear that there is more room for development.
Both service providers have evolved to include a more physical presence through the launch of the Orange Money Visa Card and My Zaka Visa Card. Customers can use the card to withdraw their money from any Visa ATM and to swipe for goods and services at Point of Sale (POS) devices in stores. Customers can also get a virtual card that allows them to shop online. This has not only helped take these platforms to a competitive level but it has also improved the access to financial services for customers, particularly those who do not have formal bank accounts.
Given that the top uses of mobile money in Botswana are for airtime purchases and money transfers, it seems clear that a significant opportunity remains for payment players with mobile capabilities in Botswana.
The market environment in Botswana for payments and fintech
Botswana is considered to be one of the best-governed economies in Africa, with a mature payments environment and eco-system, and perhaps that is one reason that mobile POS has grown so considerably. The country has also developed an integrated payments landscape, and the banks and mobile payment providers have made efforts geared towards modernised payment infrastructure.
Botswana is counted among the countries in Africa which are leading in mobile payments. Mobile payment use has grown by 10% in the past two years according to information from Statistics Botswana, with 1.8 million registered users. The report also notes that 24.4% of the population older than age 15 have a mobile money wallet.
Africa is making its mark globally. Asia-Pacific currently dominates the market, followed by North America and Europe.
The partnerships and collaborations among payment service providers and the implementation of advanced technologies such as Artificial Intelligence and Blockchain also drive market growth. It is looking bright on the mobile digital payments front. The integration of blockchain technology into payment systems has contributed to the growth of the digital payments market across the country, particularly among the younger population. This creates a market for innovation in terms of mobile security, insurance for customers, alternative mobile payments and cross-border transfers for customers.
