In its second year, Mondato Summit Africa was treated to more beautiful winter sunshine, and we had a full house and a packed line-up of great speakers and fascinating panel discussions. C-level executives and thought leaders from right across the mobile finance and commerce spectrum packed into The Summer Place in Johannesburg to thrash out some of the meatiest issues in the industry in Africa, helping to bring some clarity to a rapidly developing and exciting, but chaotic and confusing, space.

‘Mobile Money Amplified: Making Way for Mobile Finance and Commerce in Africa’ was the event byline, and it was clear that even in the 12 months since the last Mondato Summit Africa that shift is clearly underway. Nonetheless, it became apparent during presentations and panel discussions that there is still also a need for a strategic and concerted effort to reach scale across the component MFC ecosystems, and to push active usage beyond P2P and airtime top-ups.

There was a lot of optimism and confidence in the room, however, that when it comes to what Mondato’s CEO labeled ‘MFC 2.0’, Africa is well positioned to lead the world in its development, through its experiments with mAgri, merchant payments, mHealth, Mobile Micro-insurance and a growing suite of savings and loans products. In particular, the fact that Africa has more “open spaces” with un- and under-served market segments means that incremental evolutionary change could result in high uptake and usage, rather than dramatic shifts in behavior that may be required in more evolved markets.

 

Partnerships and Interoperability

 

Mondato Summit 2014 was reminded of the saying that “If you want to go fast, go alone. If you want to go far, go together”, and it surfaced again at this year’s gathering. Several participants stressed the need for the ecosystem to grow collaboratively, amid concerns that attempts to own the channel by any single party might bring short-term benefit, but in the long run throttle the channel by restricting consumer choice.

Several speakers spoke about the processes for arriving at, and the desirability of interoperability. Charles Niehaus of the IFC gave a case study of how interoperability was arrived at in Tanzania, and stressed the importance of, moves towards interoperability being industry led, with a recognized honest broker championing it (see an earlier Mondato Insight on this topic). Several speakers, including Natalie Baatjies of Visa and John Staley of Equity Bank, questioned the ultimate value of mobile money interoperability when it remains decoupled from the larger digital banking and financial system. Moreover, Mr. Staley pointed out that interoperability existed elsewhere outside Tanzania, and the issue was not its desirability, but the cost.

The value of data as the basis for partnerships was a theme that was also strongly emphasized by many participants. And while this was of itself uncontroversial, the question of who owns it and how much they charge for it was a rather trickier question. However, we did see examples of several successful partnerships in the mobile micro-credit and mobile micro-insurance spheres, and were given notice of its great potential in mHealth, mAgri and even for facilitating merchant payments, as we heard from KopoKopo.

Of course, no Mondato Summit would be complete without a head-on collision between banks and MNOs, and this year was no exception. Maria Pienaar from CellC stressed that telcos did not necessarily see OTT services as being a threat, and that rather than becoming “dumb pipes”, telcos would become essential partners. Interestingly, in this analysis Ms. Pienaar found agreement from Mr. Staley of Equity, who highlighted the cost-imposed limitations of 4G/LTE in Africa, which would restrict OTT services.

Agrippa Mugwagwa from FBC Bank pointed out that mobile money lead to “transaction inclusion”, and not “financial inclusion”, and he was joined in his perspective by John Staley. Stelios Papadakis from Barclays Mozambique was confident that banks were not going to be dislodged, given the continued domination of the economy by cash, despite recent technological advances.

 

USSD

 

Much has been written about the rise of cheap smartphones and its implications for Africa (Mondato Insight included). However, even within the context of perhaps 33% of phones in Africa being smartphones within a few years (as predicted by one speaker), few present were willing to write the obituary of USSD just yet. Areef Kassam of the GSMA identified it as one of five key channels to bringing basic, but vital, utilities to Base of the Pyramid consumers in Africa (the other four being M2M, mobile money, GSM towers, and agent networks). One such company providing solar electric, Fenix International, was the winner of the Mondato Digital Finance Plus Social Impact Award in Africa 2015.

Michel Hanouch of CGAP, on the other hand, pointed towards the need for more graphical and icon-rich user interfaces that would assist consumers with low literacy levels. He counseled a move away from a hierarchical USSD structure towards a flatter graphical interface. Interestingly, the Summit saw two providers of micro credit, afb and InVenture, take two different approaches to this issue: afb is purely USSD, with no forms required, and they did not see the market moving towards apps.

Conversely, InVenture (winner of the Mondato MFC Innovation Award in Africa 2015) is an app-based interface. Unsurprisingly, Ebele Okobi, Facebook’s Head of Public Policy – Africa, saw the future as smartphone and app-based. As well as Facebook’s own Internet.org ventures (bringing the internet to rural areas via balloons and drones), Facebook has been calling on MNOs to give free access to Facebook as an onramp to signing up for other data-driven services. Equity Bank, on the other hand, had conducted a study that showed consumers turned off the data on their smartphones and largely restricted their app usage to when they had a wifi connection. The picture, all agreed, was certainly mixed.

The volume around mobile money is certainly being turned up, as the Summit byline indicated, and as we move towards MFC 2.0. Unfortunately, that means that until the big issues are settled, it’s going to get increasingly noisy. Most of the delegates were in agreement, however, that Mondato Summit helps cut out the background noise, and focus minds on the key messages, challenges, and solutions.

Quotable quotes, top takeaways and fun facts we learned at Mondato Summit 2015:

•    “We do not see the OTTs as being out to eat our lunch but rather as our distribution partners.” Maria Pienaar, CellC
•    “PINs and passwords are unpopular among the poor and illiterate.” Michel Hanouch, CGAP
•    “Unbanked is not the same thing as poor.” Johan Bosini, afb
•    “The poor can’t afford cheap products.” Jonathon Green, Fenix International
•    “Over 50% of South Africans want to pay for ecommerce with Cash on Delivery.” Grant Brown, Zando
•    “Mobile money is transactional inculsion, which is not the same as financial inclusion.” Agrippa Mugwagwa, FBC Bank
•    “The internet and mobile technologies are making African youth the drivers of social transformation and wealth creation.” Prof. Monde Makiwane
•    “We expected the mobile world to look very delineated and simple.” Yolande Van Wyk-Steyn, FNB
•    “I still haven’t met anyone with a MasterCard ID card in Nigeria.” Uzoma Dozie, Diamond Bank
•    “Facebook wants to show people what they like.” Ebele Okobi, Facebook
•    Uber delivers kittens.

For an indepth Storify of all the happenings at Day One of Mondato Summit Africa, see the Mondato Summit blog.

©Mondato 2015. Mondato is a boutique management consultancy specializing in strategic, commercial and operational support for the Mobile Finance and Commerce (MFC) industry. With an unparalleled team of dedicated MFC professionals and a global network of industry contacts, Mondato has the depth of experience to provide high-impact, hands-on support for clients across the MFC ecosystem, including service providers, banks, telcos, technology firms, merchants and investors. Our weekly newsletters are the go-to source of news and analysis in the MFC industry.

Click here to subscribe and receive a weekly Mondato Insight direct to your inbox.