Last week two of the region’s biggest telecos released their annual results. In the case of MTN it was the release of their annual report.
Kenya’s Safaricom continues to post jaw dropping numbers.
The company, the biggest in the region, posted revenues of kshs311b
(sh8.5trillion), net profit of Ksh62b (sh1.7trillion), this on the back of
capital expenditures of Ksh96b(sh2.6trillion) most of this Ksh55b directed to
setting up their new operation in Ethiopia.
But my favourite Safaricom numbers are those of their mobile money platform, M-Pesa.
First off, every second 856 transactions are done over M-Pesa, these include transfers, withdrawals, business payments, remittances from abroad and lending. The network has a capacity to do 2600 transactions a second.
Think about the efficiency this brings to the Kenyan
business environment. That’s why everybody from the lowly vendor on the street
to businesses carry out transactions with M-Pesa. According to Safaricom 32
million Kenyans have an Mpesa account and three million businesses are signed
up as merchants.
With that kind of network, it should probably come as no
surprise that Kshs36trillion (one quadrillion Uganda shillings) flowed through
it last year. To give some perspective this figure is about ten times the
amount transacted on the MTN mobile money platform last year or just over half
the GDP of Uganda.
And because Kenyans are so plugged into M-Pesa, withdrawals
from the system is the only service not growing in double digits. Why withdraw
when you can pay for everything off the phone?
Also interesting is that $20m in remittances from abroad
came on the M-Pesa network and going by last year’s growth, this figure is set
to double every five years, probably faster as the service gains traction.
MTN, the only network whose full results are publicly
available, are beginning to follow the trend. In 2021 was the first time in the
company’s history that revenues from voice slid below 50 percent of total
revenues. A trend that continued last year but in addition revenues from voice
came in less than in 2021, the first-time voice revenues have fallen
year-on-year.
Meanwhile revenues from both data and fintech grew by 24 percent and 25 percent respectively, going by this, revenues will be doubling every three years, which further means revenues from data and fintech will each surpass voice revenues by 2026...
Unlike in the story books, in real life revolutions take
time to happen.
This column has argued for a long time that one of the major
challenges of our economy is that we do not aggregate our resources, be they
land, labour or capital, into meaningful wholes that can then benefit the
greater society.
For the longest time we have been gritting our teeth on how
to get more Ugandans into the formal financial sector. This is important
because all that money that is lying idle in our wallets and under our
mattresses, if banked can be used to finance people who need the money.
And it is quite significant by some estimates more than half
the money in circulation is lying around doing nothing.
With the introduction of agency banking the banks have
managed to extend their reach, more than they have since independence. But now
imagine that the 25 million or so mobile phones can extend this reach even
further.
In the 14 years since mobile money was introduced to this country between them MTN and Airtel reported about two trillion shillings in deposits, at the end of last year. In MTN’s case assuming they maintain 25 percent growth in deposits they will reach Stanbic Bank’s current six trillion shillings by 2030...
Like in Kenya where twice the GDP of the country was
transacted over M-Pesa last year, mobile money will soon be major component of
our GDP.
By first mopping up our small monies and then reducing the
friction that comes with using cash, the growth of mobile money is set to bring
greater efficiencies to the economy.
I remember in the 1990s reading an article about a town in
the UK that was going cashless. The story was that the town would issue cards
to everybody, essentially debit cards and these would be accepted by all
traders. At the time we had only one Atm
in the country, at Barclays Bank, Kampala Road and it would take stretch of
imagination to imagine cashless society here.
It is still early days, but the people at MTN Momo are
grappling with the challenge increasing transactions using their platform, they
estimated less than a million of 11 million subscribers actually transact over
the phone. But a 90 percent growth in transactions was reported last year,
helped by the tripling of merchants to 173,000 last year from 53,000 in 2021.
In addition, they are looking to revamp their overdraft
offering to go alongside their small loan product.
These two initiatives will not only digitize money but also
provide a treasure trove of data can be mined to determine what works and what
doesn’t in issues such as poverty eradication programs.
Now we do not have to go all the way to the UK – visa
hustles and all, to see how a truly cashless society will look like.
A few years ago while in Mombasa I had to get an uber in the
morning, when it was time to pay for my fare, the driver had no change.
Annoyed I asked him how he can start the day without change,
“And you how can you not be on M-Pesa?” was his swift reply.
