MTN AND THE FUTURE OF THE ECONOMY

Last week telecom company MTN released its 2022 results.

Revenues, profit were up and for investors in the company they will be paying out their final dividend for the year, which will have seen shareholders pocket a total of sh15.9 per share for 2022.

Everybody has their favourite numbers, I am always interested to see how the data and fintech subscribers and revenues are moving, especially against voice numbers.

First of all in 2021, it was the first time, that revenues from voice – what we pay to call, fell below half the companies total revenues. While these grew by 3.6 percent, data and mobile money revenues grew in double digits upsetting the status quo.

"In 2022 data and fintech revenues continue to gallop ahead while voice revenues slipped 0.5 percent, the first time in the company’s history that voice revenues did not grow...

The writing is on the wall voice is out and data and fintech are in.

It reminds me of former Safaricom CEO Bobby Collymore’s prediction when he took over the reins at the Kenyan telecom firm, that one day voice will be an add on, given away for free, that the action will be in data and fintech services. I could not relate at the time but it is coming to pass every day.

When Airtel lists its shares – they were supposed to do so by July last year, we will be able to tell whether this is an industrywide trend or restricted to MTN. I bet it shows across the industry.

This is an important, even critical, to the development for the economy.

Beyond the ever-increasing access to information that come with improved and more widespread data services is the fact that credible business transactions can be done quickly and safely using data.

The spoken word has its limitations. Information transmitted via this medium – unless recorded, can be dismissed or refuted in the future. The written word is more easily verifiable, hence the need for written contracts.

While its possible that most of our data is consumed by entertainment, it just as likely that its use in business is expanding.

"The efficiencies to the whole economy will creep up on us, because it is easy to take these new services for granted, but let us look back to an earlier time.

There was a time when there when we did not have mobile phones ( for those born after 2000, just believe it) and the country was good for about 50,000 landlines, many of which were down anyway.

So things we take for granted now like making and confirming appointments, deliveries, calling a cab these were all none existent activities. How did we go about these things? We did not. Booking appointments was done in person or by mail (if you had a post office box), deliveries? How! And you walked to where the special hires (do you remember those guys) to get a ride. The explosion in boda-bodas has been largely facilitated by the mobile phone. There were no bodas, expect maybe at the border.

Efficiency is the ability to do more work per unit of input. The input may be time or money or effort. So we are now doing more work than we used to because we can communicate better.

Taken to the next logical conclusion is the rise of mobile money or fintech as a sector. The efficiencies here are obvious ( at least to me). To give my friend or relatives money I had to meet them in person, send someone with their money or they send someone to pick the money Now for the cost of less than a return taxi fare I can move money around at the speed of light and the other minutes, which would have been spent going to and fro can be used for something else.

Some stoneagers would rather stand in line at the bank to pay their bills than pay the transaction fees charged when they pay online. They cannot be helped.

And these our most basic transactions in a day scale it up now to companies, schools and traders and the numbers begin to bogle.

In June last year it was reported that the total number of mobile money transaction stood at sh145trillion in the first six month so last year. To put this in perspective the national budget was about sh48trillion for the whole of 2021/22.

"By definition when money moves it moves to where is needed from where it less needed, broadly speaking. These trillions of monies a large part of it, was probably doing nothing under our mattress, in our socks and bras. It has taken mobile money companies to liberate them from those dark, smelly corners into the light of day...

MTN reported that last year fintech users grew about ten percent to 11 million users. Assuming they show the same rate of growth (my feeling is it will actually accelerate) we will be doubling mobile money users ever seven years. What seemed like a pipe dream a few years ago, becoming a cashless society,  is happening before our very own eyes.

The more of us who are signed on to mobile money and other fintech applications the faster transactions will be done in the economy. And if time is money it follows that the economy will be the better for it.

It probably explains why you can turn up at a bar on a Monday night in Kampala and it seems like the weekend – money is flowing more efficiently boosting consumption and inevitably production.