The mobile payment markets we (almost) slept on

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In this week’s edition, we’re digging into the fintech markets we almost missed.

We teamed up with pawaPay, a payment company doing well outside Africa’s big four markets.

Let’s get into it.

Africa’s been the “next big thing” in tech for over a decade.

We’ve watched local companies take on big problems, global giants expand here for fresh markets, and investors line up to back them.

But one thing has stayed the same: Four countries are still taking the spotlight.

Every year, Nigeria, Kenya, Egypt and South Africa (a.k.a the Big Four) grab over 75% of VC funding.

And because they had big raises, gave us a few unicorns and had some early wins in fintech, it’s easy to expect most future growth to come from them.

But there are even bigger opportunities in places we haven’t looked at yet.

By 2050, the continent will double in size, and one in every four people on the planet will be African.

But it’s not just the Big Four that will push this growth.

It’s a group effort of another 51 countries:

• Ethiopia with 126 million people and the DRC with 102 million have the biggest populations after Nigeria

• Senegal (8.2%), Tanzania (6.1%), Rwanda (7.8%), and Côte d'Ivoire (6.8%) are on track to be the fastest-growing economies in the world

• And the IMF’s list of Africa’s biggest economies now includes Algeria, Angola, and Morocco.

Growth stands out most with mobile money

Mobile money is a means of sending money or making payments using mobile phones — no bank account needed.

Africa has almost 75% of the world’s mobile money accounts.

And in 2023, merchant payments leapt by 14% to almost $74 billion.   

For a while, mobile money could be felt in the countries where it broke out:

• Kenya, where it all began with M-Pesa

• Nigeria, which is currently driving growth in West Africa

• And Senegal, which is home to the mobile money unicorn Wave.

These markets gave us early wins and, naturally, drew in players like MFS Africa and Cellulant to tackle mobile payments.

But this left a big gap in other countries, which are now trying to catch up.

The mobile payment markets we almost missed

In Cameroon, mobile money use surged from 29.9% in 2017 to 42.7% in 2022 among people aged 15 and older.

In Central Africa, Cameroon leads in adoption, followed by the Democratic Republic of Congo (DRC) and Gabon.

Down south in Zambia, we see mobile money dominating payments.

Last year:

• 56% of all retail payments in Zambia were done with mobile money.

• 34% of informal workers were paid using mobile money.

• And the total value of mobile money transactions reached $17.2 million (K452.0 billion)

Mobile money is growing, but it also means the African payment system is getting more fragmented.

If you want to do business across the continent, you’ll need to link up with more players to get paid.

This opens up a huge opportunity, especially in younger mobile money markets.

As a local business in Zambia, you’re dealing with Zamtel, MTN, and Airtel — the big three players.

And for international merchants like Bolt or Starlink, these integrations can be a real pain — taking longer and costing way more.

This is because different countries use multiple mobile money platforms, each with its own fees and regulations.

This is why five years ago, back in 2020, pawaPay was launched to make payments easier

They brought Africa’s mobile money operators together into a single API.

To get there, they first did their homework on where Africa’s population was heading.

Big cities were always on their radar, but they got excited about the likes of Kinshasa (DRC), Kampala (Uganda), and Lusaka (Zambia) which were growing super fast.

And so was their mobile money uptake.

Backed by early investors like Nigerian singer Oluwatosin Ajibade, a.k.a “Mr Eazi”, they made their first bold move in Zambia.

Betting outside the big four = big wins

Today, Zambia is one of pawaPay’s biggest markets, along with Cameroon, Uganda, Ghana, and Mozambique.

The catch?

Mobile money is starting to take off in these countries and is far from hitting a ceiling.

Last year, in Kenya, mobile transactions grew at their slowest pace in 16 years, with just a 0.5% bump.

Compare that to Zambia, where transactions surged by over 50%.

For pawaPay, the long game is to link the world to Africa through mobile money.

In Cameroon, they’re teaming up with a major remittance player, and in Ghana, they work with a popular ride-hailing company. 

All of this has helped pawaPay become one of the fastest companies to reach … 

One billion transactions

They smashed through 1 billion mobile money transactions last week.

pawaPay enables 3 million transactions every day for their merchants.

They’re live in 18 countries - but the ones that got them here are not usual giants.

They connect:

• 90% of mobile wallets in Senegal (19.2 million active users)

• 100% of mobile wallets In Ivory Coast (15.3 million active users)

• And 100% of mobile money wallets in Burkina Faso ( 7.2 million wallets)

Big Four myth?

It may feel like Africa’s fintech opportunity is only in the Big Four.

But the hype is getting rusty, and pawaPay is showing us a new reality.

In Kenya, they had to wait four years just to get a license.

The regulations here are tough, and there’s one dominant player- making it really hard for fintechs to break in and win the market.

Then you’ve got Nigeria, where the game’s already locked down.

The early players like MFS Africa, Paga, and Flutterwave made their bets and won over the market, so if you’re new, it’s a tough crowd to crack.

And in South Africa?

Mobile money just never really took off.

Banking is what works there, so there’s no real demand for mobile money.

Mobile money is finally taking off in countries that until recently, were not on the tech map.

This leaves a big opportunity for fintechs that can build platforms that clamp down on fragmentation.

We’ve made some serious headway in fixing this in big markets like Nigeria and Kenya.

Now, imagine the possibilities if we bring together all of Africa’s mobile money providers into one seamless solution for smaller markets.

That’s where the real magic can happen.

Which African country do you think will be the next big opportunity for mobile money?

Hit reply and let us know

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