South African telecommunication giant MTN Group may have made its ambition to secure a mobile money license in Nigeria public knowledge; it is however not resting and waiting for 2019 when the Central Bank of Nigeria will come knocking on its door with the coveted license. The largest mobile network in Africa rather is positioning itself one strategic partnership at a time for the spot of the largest digital bank on the continent.
It could have seemed improbable many years ago that a non-banking entity would be the dominant force in the financial services segment, but with the digital revolution driven mostly by incredible mobile phone penetration growth, nearly everything has turn 360 degrees. A mobile telecommunication network can now aspire and by the looks of things, there may be no stopping it.
MTN which has a mobile money treasure chest of 22 million customers made two important announcements in November.
First it reportedly unveiled a smart feature phone as part of plans to stake a claim in Africa’s mobile hardware market. The hardware of the smart feature phone will be created by China Mobile, with a faster 3Gs smart chipset created by Chinese technology company Unisoc. The phone, according to Quartz Africa, may not have the advanced computing abilities that would make it a smartphone, but it has a specialized operating system that allows it to run popular social media apps and simple email formats.
KaiOS technologies a company that specializes in creating a smart phone user experience for feature phones will run the phone’s operating system. KaiOS promises to feature localized apps alongside international favorites on it. The MTN smart feature phone will offer users WiFi and Bluetooth connectivity, the Google assistant and ease of access to social media apps.
The phone will be launched in Nigeria and South Africa in the first quarter of 2019, and will retail at $20 to $25. The company plans to expand distribution of the phone to 15 other African countries where it operates.
“It means they have been looking at their data and have seen the population of feature phones on their network,” Emeka Azuka Okoye, CEO of Cymantiks Nigeria Limited told BusinessDay.
MTN’s bet on smart feature phones clearly aligns with its mobile money plans. They have become integral to the success of mobile money and hence the primary way of providing financial services to the 115 million Nigerians without a bank of account.
In this regard, the feature markets have seen remarkable growth in recent times. For instance, feature phone shipments to Africa surged 32 per cent year-over-year in the second quarter of 2016, while smartphone shipments declined by 5.2 per cent. The growth is being attributed to a new breed of manufacturers who are building affordable and durable feature phones with capabilities such as LTE data connections, email and web, and text to speech combined with long battery lives (lasting up to one month standby time).
The MTN phone also has a front and back camera and promises a longer battery life, which would be a plus in a market like Nigeria where electricity is not always guaranteed.
Secondly, MTN has also announced a joint venture with fellow mobile giant Orange Group to enable interoperable payments across the continent. The mobile wallet interoperability (Mowali) service 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 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 sub-Saharan Africa’s 46 markets. Mowali also enables interoperability between digital financial service providers beyond MTN and Orange operations and markets, to support the existing 338 million mobile money accounts in Africa.
“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 would unlock further innovation in the digital financial space within the continent,” Ndubuisi Ekekwe, founder of Famiscro Group wrote in a LinkedIn post. “This is the greatest threat to MPesa in East Africa at least. They are building a new layer we need in Africa.”
Should CBN make good on issuing licenses to telcos in 2019, MTN automatically grabs the top spot in the market in Africa. With the largest mobile subscriber numbers, a smart feature phone and Mowali, even Safaricom the leader in mobile money services on the continent knows the game is up. Make way for the new king of mobile banking.
