Mobile payments in West Africa
by Sarah Rotman : Thursday, July 9, 2009
When speaking of mobile payment services, the countries that are usually mentioned include Kenya, the Philippines, South Africa and a few others. Here at CGAP, our projects also focus on places such as Mongolia, Pakistan, the Maldives and India. Yet what about West Africa, and specifically francophone West Africa, as the next frontier of mobile banking?
I recently visited Cote d’Ivoire and Mali to learn more about what the banks and mobile network operators (MNOs) are doing in this region. Here are some of my initial observations.
Orange has an ambitious roll out plan for Orange Money
Orange is a French mobile network operator with a strong presence in 14 African countries. In December 2008, Orange Cote d’Ivoire launched its new mobile money product, Orange Money. Cote d’Ivoire is a very competitive and fragmented mobile market with Orange (39% market share) facing stiff competition from MTN (35%), Moov (20%) and Comium (5%). Orange moved quickly into the mobile money space to keep an edge over its competitors.
But MTN is not far behind
MTN has its own plans to launch Mobile Money in West Africa in the near future.. This will build off of its progress in other African countries. For example, MTN Mobile Money launched in Uganda in March and has since recorded 180,000 transactions . They have recently announced plans to roll out their product in 23 countries across Africa.
Common regulatory framework makes cross-border transactions possible
What makes the case of Orange Money particularly interesting is the common regulatory framework in which many of Orange’s subsidiaries work. The Central Bank of West African States (Banque Centrale des Etats de l’Afrique de l’Ouest – BCEAO) is the central bank serving 8 West African countries which comprise the West African Economic and Monetary Union. These 8 countries also share a common currency, the West African CFA franc. Given Orange’s strong presence in many francophone West African countries under the BCEAO (including Cote d’Ivoire, Senegal and Mali), this presents an interesting potential for cross-border transactions which have been held up in other regions due to obstacles in regulation.
July 14th, 2009 at 9:30 am, Jim Rosenberg ()
You are right that there are substantial remittance flows from France back to this region of the world. (See: http://www.worldbank.org/prospects/migrationandremittances/). Cross-border transactions of this sort, however, can be tricky from a regulatory perspective, so even with these large flows, this probably wouldn’t drive the Orange Money business from the beginning. In terms of domestic remittance flows, this will be a critical element for Orange (and other MNOs for that matter) to understand very well from the very beginning of implementation. Agent networks and customer outreach efforts should be targeted around these domestic remittance corridors.
5 Comments
July 12th, 2009 at 10:19 am, Dave Birch ()
I assumed that there was a big remittance business from France back to these countries, but I can’t find any figures to back this up. Is there enough domestic remittance business in these countries to get Orange up and running do you think?