Expanding Africa's financial system, recent moves by Angola, Ethiopia, and Egypt.

Angola

Angola, Ethiopia, and Egypt are expanding their financial systems by issuing new mobile money licenses, planning to issue bank licenses to foreign companies, and implementing tokenization regulations, respectively. The objective is to promote economic growth, enhance financial inclusion, counter online fraud, as well as curb digital payment breaches.

Last week, Africell launched Afrimoney mobile money, its mobile financial services platform, in Angola. The platform offers various services, such as deposits, mobile recharges, person-to-person transfers, bill payments, and merchant payments. In the future, Afrimoney plans to expand its services to include financial products like credit, savings, and insurance. Africell was awarded the country's fourth mobile phone license in 2020, the first to be awarded in two decades. Angola's other mobile operators include Movicel, Unitel, and state-owned Angola Telecom. In 2021, Unitel Telecoms launched its mobile financial service, UNITEL Money.

With an estimated 50% unbanked population, mobile money services can promote financial inclusion and drive economic growth.

Why does this matter?

The launch of Africell mobile money in Angola has several implications for the country's financial sector and economy. The service will increase competition in the market, driving innovation and lowering consumer costs. It will also expand the range of mobile money services available to consumers and lead to the widespread adoption of digital financial services, promoting greater financial inclusion.

Ethiopia

Last week, Ethiopia's central bank announced its plan to issue up to five banking licenses to foreign investors within the next five years. This move is part of expanding their financial services sector to foreign competition.

The state-owned Commercial Bank of Ethiopia dominates Ethiopia's banking industry. The sector has 29 players, all locally owned. In a similar move to end the monopoly of state-owned Ethio Telecom in the telecom industry, the Ethiopian government awarded a private operator, Safaricom Telecommunications Ethiopia, in 2021. Safaricom Telecommunications Ethiopia is a consortium led by Safaricom, Vodacom, Vodafone Group, Sumitomo Corporation, and CDC Group.

According to the Rest of the World organization , Safaricom had 2.5 million mobile subscribers in Ethiopia in March 2023 and covers 27 cities. In addition, Safaricom is finalizing its technical and commercial preparations to launch its digital payment service, M-Pesa, in the Ethiopian market.

Why does this matter?

The launch of Safaricom Ethiopia mobile money and the allowance of foreign banks to obtain a license will have significant implications for Ethiopia's economy and financial ecosystem.

Introducing Safaricom Ethiopia mobile money will increase financial inclusion among Ethiopians previously excluded from the traditional banking sector. In addition, Safaricom Ethiopia's mobile money will allow for easier access to financial services such as savings, credit, and insurance, boosting entrepreneurship and economic growth.

Also, allowing foreign banks to obtain licenses will increase competition in Ethiopia's banking sector. This will lead to better products and services, including enhanced digital banking infrastructure and increased access to credit. Additionally, foreign banks will bring advanced banking technology and expertise to Ethiopia, which will help modernize the country's financial sector.

Egypt

According to the Central Bank of Egypt (CBE), the proportion of the eligible population (i.e., 16 years old and above) who have a bank account, a post account, an active wallet, or pre-paid card has been increasing over the past years and was last registered at 53.3 percent as of June 2021 .

In March 2023, CBE implemented new regulations regarding payment card tokenization on electronic device applications, also known as "Tokenization Regulations, as an initiative to strengthen the banking sector's infrastructure and promote the use of electronic payment tools by customers in their day-to-day transactions.

Last week (May 2023), Mastercard announced it is collaborating with CBE and the Egyptian Banks Company to provide infrastructure to all issuing banks to ensure that the tokenization regulations are effectively implemented.

Yet according to Statista , cash remains the dominant payment method in Egypt, as of 2022, with 57 percent of online purchases being paid through this method. Cash payments constitute an estimated 64% of the transactions in Egypt.

Why does this matter

Card tokenization ensures that the user’s sensitive information is protected from potential fraud or theft and allows for faster and more convenient transactions, facilitating simpler online payments, quicker checkouts, and easier card management. This will attract new market players and take fintech innovation to new milestones.

According to CBE’s Egypt Fintech Landscape Report, 2021, there were only two fintech startups were operational in Egypt in 2014, but by 2021 there were 112, and between 2016 to 2021, $250 million was invested in the domestic fintech industry. In 2021 alone, investment in the fintech sector increased by 300 percent, a total of $159 million.

This policy implementation is in the right direction to move things forward.

***About Ifunanya is a Senior Consultant at KoreFusion. Based in Hong Kong, Ifunanya built her career working in Nigeria across retail, commercial, and corporate banking.?More recently, her experience includes being a pioneer employee in Africa's fintech sector and working in Hong Kong’s fintech scene. If you've enjoyed this piece, don't hesitate to like, leave a comment and share the article with others.

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