Out-Law / Your Daily Need-To-Know

African mobile money operators in networks deal to boost remittances

Out-Law News | 23 Apr 2015 | 12:20 pm | 1 min. read

Customers of two of East Africa’s leading mobile money operators will be able to transfer money to each other across both networks, following a deal agreed between the MTN Group and Vodafone Group.

Under the terms of the deal, the operators said they will also share best practice and “work together to define the rules and standards of mobile-based remittances in Africa”.

MTN said the ‘interconnect’ collaboration, “between the region’s two biggest mobile money operators, will enable convenient and affordable international remittances” between customers of the M-Pesa mobile money network in Kenya, Tanzania, the Democratic Republic of Congo and Mozambique, and MTN Mobile Money customers in Uganda, Rwanda and Zambia.

MTN group head of mobile financial services Serigne Dioum said that, following launches in Ivory Coast and Benin in West Africa, the company will use its collaboration with Vodafone “to build a scalable model that will accelerate remittance roll-out across the continent”.

Telecoms law expert Diane Mullenex of Pinsent Masons, the law firm behind Out-Law.com, said: “This is a significant development in what is a growing market across Africa and will improve mobile money services for customers across the countries concerned, as well as aiding in developing the countries' financial infrastructure. It will be interesting to see the extent to which other service providers follow suit.”

In MTN’s Sustainability Report for 2014, published last month, the company said it had made “significant developments in enabling digital inclusion and access to basic financial, ‘m-health’ and ‘m-insurance’ services” across its markets. “In this regard, 1.9 million affordable handsets were made available to customers, and 4,000 farmers received payment for cotton produce via MTN Mobile Money in 2014,” the report said.

Last August the International Finance Corporation (IFC), part of the World Bank Group, announced a $1 million advisory services agreement with Airtel Zambia to increase access to mobile financial services in the Zambian market. The project is part of a $37.4m joint initiative of IFC and The MasterCard Foundation to expand microfinance and advance mobile financial services across sub-Saharan Africa (SSA).

A survey published last year by Swedish technology company Ericsson said SSA’s mobile data traffic was predicted to grow around 20 times between the end of 2013 and the end of 2019.

The Boston Consulting Group said in a report published earlier this year that SSA is adopting mobile financial services “at a pace seen in few other places, presenting banks and mobile-network operators with a set of strategic choices that will go a long way toward determining their success in the region”.

According to the report, the value of the region’s mobile money market could grow to $1.5 billion over the next four years as Africa’s ‘unbanked’ use their phones for a variety of financial transactions.

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