Africa is changing for the better. In the past decade, Africa’s growth rates have quietly been approaching those of Asia. Last year, according to estimates from the International Monetary Fund, seven African countries appeared on the list of the world’s 10 fastest-growing economies, each with annual growth rates of 8% or more. Democracy is becoming firmly entrenched, with all but a few of the continent’s 1 billion people expected to vote in this year’s democratic elections.
Child mortality rates have decreased significantly, with 12 countries reporting declines of more than 4.4% per year. Polio was eradicated in most parts of Africa and now AIDS contagion levels are beginning to recede. Millions of men and women are healthy again and back to work, and more children—especially girls—are in school than ever before.
Poverty is also on the decline. According to a recent McKinsey report, Africa already has more middle-class consumers than India, which has a larger population. And by 2030, the African Development Bank estimates that most African countries will boast middle class majorities, taking consumer spending to $2.2 trillion a year.
Lack of roads or infrastructure is becoming less of a barrier to the exchange of information. The new undersea fiber optic cable EASSy (Eastern Africa Submarine Cable System) links 21 African countries—including Ethiopia and Sudan for the first time—to the rest of the world, bringing broadband connection and making mobile phones the continent’s new drumbeat. Nearly 90 percent of all phones in Africa are mobile and by the end of 2012, global cellphone association GSMA estimates there will be over 735 million mobile subscribers on the continent.
Although mainstream American media has not reported these bright trends, corporate America has been following Africa’s recent growth path more closely. Global corporations are investing heavily in this promising new Africa. One example is Walmart’s acquisition of Massmart, which sets the world’s leading retailer on track to expand in sub-Saharan Africa. IBM recently opened offices in more than 20 African countries, including an Innovation Centre in South Africa. Google reportedly is expanding web-infrastructure all around the continent, including the launch of an IT incubation center in South Africa. Some early birds are already reaping results. Amazon’s investment in a lab in Cape Town a few years ago has produced the development of the company’s first cloud offering.
Visa’s acquisition of Fundamo, the Cape Town-based mobile money platform I co-founded 10 years ago, is another good example. When we started Fundamo, we could not anticipate the transformational effect mobile money would have in Africa. It brought mobile network operators and banks together to take advantage of the exponential growth of mobile phones ownership in Africa, ushering in a movement that has revolutionized the way financial services reach unbanked and under-banked people in developing economies.
Over the last decade, 100 million people have been newly ‘banked’ using mobile technology, many of them in Africa, and according to Juniper Research, this number is expected to double to 200 million by 2013. Today, there are more than 100 mobile money deployments worldwide, enabling millions of unbanked and under-banked consumers to pay bills, buy airtime and goods, and send money to relatives living far away.
For mobile network operators, financial institutions, platform providers and technology developers, mobile money became a powerhouse of profitability, showing that there is good business in lifting the poor out of poverty and connecting the unbanked to the formal financial system—a case that non-profit organizations have been making all along. The proof is in the numbers: Kenya’s Safaricom reported a significant increase in total revenue last year with M-Pesa, their mobile money program, generating nearly one-third of the company’s profits.
For Africa, mobile money represents the potential for an enormous leap forward in development. It helps include people previously in the shadow of the informal economy and increases government earnings that can fund social and economic development. It delivers access to formal financial services and brings the security and convenience of electronic payments to millions of people in developing countries, breaking the cash economics that often locks them into poverty. It can enable entire industries, creating jobs and revenue streams that didn’t exist a decade ago.
The mobile money industry has also triggered a new wave of development, inspiring the creation of many secondary businesses, ranging from innovative financial services to the provision of utilities and digital goods. The progress mobile money ignited in Africa is now making inroads into other continents, particularly in developing economies in Asia, such as India, Bangladesh and Pakistan.
The time has come to fuel the mobile money virtuous cycle and to reach the more than one billion consumers in Africa and beyond that have access to a mobile phone but do not have a formal bank account. To do that, our community will have to come together and build a global mobile money industry that is future-proof, offering the interoperability necessary to finally connect African consumers to the global economy.
credit – forbes.com – written on 11/09/12