Hakuna matatu

Well on their way:

Payments are improving Africans’, and Africa’ s, economic prospects

In a nation developing as rapidly and diversely as Africa’s, the importance of being able to get around with ease and grasp opportunities for work and general self-improvement as they materialise, cannot be underestimated.

Which is why digital payments platform BPC has invested significant effort into enabling that through increasingly seamless payments technology, including an initiative involving 10,000 of Kenya’s colourful and iconic matatu ‘disco buses’. In a country known for its hit-and-miss IT and physical infrastructure, mobile phones have taken the lead, over recent years, as facilitators of both lifestyle and the payments it relies on. As such, they provide a vital route to financial inclusion for millions. In fact, Kenya National Bureau of Statistics data shows that, in this country alone, the value of mobile money transactions surged by 63.2 per cent, to KSh15.3trillion (US$0.13trillion), in 2021, compared to KSh9.392trillion (US$0.08trillion) in 2020; while the total number of mobile money transactions completed rose by 16 per cent to 2.165 billion. This is coinciding with a number of infrastructure projects to help people physically get around and improve their financial lot, including the building of expressways linking major towns and cities. These, too, have the potential – and need – to be powered by seamless payments using the various mobile-first options the population are now so comfortable with, according to BPC managing director Frank Molla. At the same time, the disparate nature of the African continent means one size does not fit all, and solutions must be tailored to the individual needs of its different markets. For example, in Kenya, 70 per cent of the 54 million-strong population are dependent on buses, and payments have a key role to play in boosting financial inclusion by enabling people to get from A to B for work and other purposes, through seamless, electronic ways of paying. However, while Sub-Saharan Africa as a whole may have been responsible for 64 per cent of the estimated US$2.1billion in daily global transactions via mobile money Better social mobility is the greatest gift payments platforms in 2020, according to the mobile can give Africa’s people, says BPC's Frank Molla operators trade body, GSMA, 57 per cent of Africans, or 360 million adults, still didn’t

hold any kind of bank account, including mobile money accounts, according to BPC’s own Digital Banking In Sub-Saharan Africa report, released this Spring.

And the need to improve on this has never been more urgent. Chill economic headwinds blowing through this nation, whipped up by the COVID-19 pandemic and now the Russia-Ukraine conflict, are threatening to stall Africa’s progress. Indeed, these led, in April, to the International Monetary Fund (IMF) downgrading its Sub-Saharan Africa growth forecast for 2022 to 3.8 per cent from 4.5 per cent. And, given Ukraine is a globally important exporter of wheat, corn, barley and fertiliser, Mike Dunford, world food programme regional director for Eastern Africa, has said the region is facing its worst food security situation in recent history, with 82 million people now ‘acutely hungry’, up from 50 million this time last year.

Under these ominous clouds, BPC remains focussed on its endgame of ‘having some impact on people’s lives, on how they bank, how they pay, and how they transact… bridging digital into real life’, says Molla.

It is doing this by using available infrastructure like the ubiquitous mobile phones, to enable people to improve their circumstances by getting around more easily. In Kenya, this has involved ‘empowering’ almost 10,000 matatus using digital fare-paying capability, through BPC’s innovative automated fare collection solution, O-CITY, now used in more than 130 cities globally, including in Africa.

It is designed to leverage the M-Pesa mobile wallet, already the preferred payment method of 80 per cent of the Kenyan population and Africa’s most successful mobile payment service. Passengers enter a code on their phone and a debit is made via their wallet, which can be instantly seen by drivers to grant access to ride. The platform does away with tickets and cash payments and increases transaction efficiency and transparency.

Highlighting the benefits of such initiatives, Molla argues: “I can easily board a matatu today, I don’t need to carry cash. I get inside, get my seat, there is a till number, the conductor will tell me ‘Frank, from this destination to this destination it’s this amount’, I enter it and I’m done.” BPC’s mobile-enabled payments are a win-win for matatu operators and passengers alike. Neither need carry cash anymore, the former can easily reconcile their daily takings and passengers don’t have to worry about having the exact fare because drivers often don’t have change..

Beyond financial inclusion and the environmental benefits of reducing traffic in heavily-congested cities like Nairobi by enabling public transport use, there are wider ramifications too, such as improving tax collection for government.

And the journey has only just begun, says Molla: “We haven’t really scratched the surface, yet, in terms of improving mobility, because a lot of stuff is still closed-loop.”

One example is the Nairobi expressway, which runs 27 kilometres from the heart of the city to the airport. Ahead of its opening, in 2019, Molla had to pay for a sticker to use it, the only other option being to pay in cash during travel. But there are many ways in which the experience could be improved.

“The essence of the expressway was to reduce traffic and make it faster to get to and from the airport. What took one to two hours, now takes five to 15 minutes. What I’d like to see is a shuttle bus carrying 20 or more people with a dedicated lane and pick-up and drop-off points, with the journey charged at a fair price. And, of course, the buses or matatus on the expressway should be cashless.“

We haven’t really scratched the surface yet, in terms of improving mobility, because a lot of stuff is still closed-loop

There’s also the possibility of introducing number plate recognition to smooth the payment process – which, currently, doesn’t even accept M-Pesa.

In fact, Molla’s vision for payment methods for this expressway and others being built across the continent, goes further. “Let’s have QR code, let’s have different lanes, for different people – a sensor lane, an M-Pesa lane, a cards lane – so that, as a consumer, I can decide how I want to pay.”

QR and other technologies are already embedded in O-CITY. As Molla puts it: “O-CITY enables me to scan, pay using M-Pesa, use near-field communication (NFC), or whatever other method I wish.

“So, in Kenya, we still have more room to offer these different methods of payment – as BPC has introduced in the Philippines, the Ivory Coast and Latin America,” he adds.

Providing such variety is one thing, of course, while doing so compliantly and securely – particularly in a complex and developing country like Africa – is another.

For BPC, which has built its business on the principle of ‘link[ing] real life needs to smart digital solutions’ and helps customers in industries from retail to transport build ‘meaningful ecosystems’, the answer lies in the likes of biometric technology such as facial recognition, as well as leveraging AI and 5G capability. It also means taking account of differing mindsets and cultures and thinking ‘glocally’, as Molla puts it.

“We have to look at different regions differently, saying ‘yes, biometrics, but for which part of the world?’, ‘will AI work in this place?’ or ‘yes, 5G, but is the technology already present in this particular country?’,” he adds: “We also have to be cognisant of the direction of regulation, as far as payments are concerned. And, where we look to collaborate, we (need to) ensure regulation isn’t going to impact our innovation efforts.”

In fact, African regulators have shown commitment to maintaining progress. Revised guidelines for agent banking and e-money issued by regulators in Ghana and Ivory Coast, have allowed operators to offer mobile money accounts facilitated by real-time gross settlement, currency exchange and remittance network, Ripple. The ensuing boom saw mobile accounts in Ghana triple in three years, and increase by 40 per cent in Ivory Coast.

The Central African Republic’s decision, in April, to adopt Bitcoin as legal currency, could have far-reaching implications for the payments space, if legalised use at state level has the knock-on effect of helping broaden market access to more non-bank competitors and driving down users’ costs.

Meanwhile, the presence, in Kenya and elsewhere of super-apps like Safaricom’s M-Pesa Super App, is increasing the ease with which people can pay for their day-to-day needs, says Molla.

“Safaricom is making its app fun, so that people enjoy using it, and it has seen adoption by around nine million people already since its launch last year.”

Payments in Africa are clearly going places…