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• Introduction to MFS

• Growth Forecasts

• Key Players

• Country Case Studies

• The Future of MFS

Outline

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Mobile Financial Services Models

• Bank-led (mobile apps and SMS-based)

• Operator-led

• Collaboration between banks and operators

• Independent network-agnostic platforms

Intro To MFS

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Kenya Uganda Tanzania Cote d'Ivoire Zimbabwe Rwanda South Africa Ghana Zambia Sub-Saharan Africa

Nigeria

Mobile penetration rate (2014) Account at a financial institution (% age 15+) Mobile account (% age 15+)

Mobile Financial Services Still A Nascent Market

Source: BMI, World Bank

Key services

• P2P transfers

• Bill payment

• Savings and loans

• Merchant payments (C2B)

• B2B payments

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How Big Is The MFS Market? 2011 2012 2013 2014

MFS Subscriptions 39.97 57.15 78.87 101.48

Net Additions - 17.19 21.72 22.61

Operator Mobile Money Accounts 20.00 33.08 52.48 72.63

Other MFS accounts 19.97 24.07 26.40 28.86

MFS As % Mobile Subscriptions 9.0 11.0 13.7 15.7

MFS As % Population 4.8 6.7 9.0 11.3

Sub-Saharan Africa MFS Forecast

Source: BMI, Operators, World Bank, Regulators, National Banks

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MFS Subscriptions, mn (LHS) MFS As % Mobile (RHS)

MFS As % Population (RHS)

Limits To Growth

• Tight regulations in Nigeria, South Africa

• Closed telecoms market in Ethiopia

• Political and economic instability in Sudan and DRC

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• Regional players will drive subscriptions growth

• Widening range of services increasingly important for

customer retention and revenue growth

Key Mobile Players

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MTN* Orange* Tigo Airtel

Vodacom Safaricom Econet

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MFS as % of total mobile subscribers Y-o-Y growth in MFS subscribers

Total MFS Subscriptions By Operator (‘000) MFS Penetration And Growth Rates (%) – Q215

* Includes Africa and Middle East. Source: BMI, Operators ** Q115. Source: BMI, Operators

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The Wider Ecosystem

IT Solutions Providers

•MFS Africa

•eServGlobal

•Mahindra Comviva

•Interswitch

Financial Service Providers

•Ecobank

•Visa

•Commercial Bank of Africa

•First National Bank (ZA)

•Western Union

•MoneyGram

Operator-led MFS

Customers

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• Most mature MFS market globally

– Rising usage of MFS for merchant payments

– Access to affordable loans and savings

• Growth driven by increasing number of transactions rather than growing

customer base

Kenya – Deepening Reliance on MFS

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Value, KESbn (LHS) Customers, mn (RHS) Transactions, mn (RHS)

Source: Central Bank of Kenya

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Safaricom Reaps The Benefits Of

Market Leadership

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Safaricom Airtel Orange Mobikash Equitel Tangaza

Mobile Money Subscriptions, '000 (LHS)

Mobile Money As % of Total Mobile Subscriptions (RHS)

M-Pesa 30-day Active as % of Total Mobile Subscriptions (RHS)

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M-Pesa Revenue, KESmn (LHS) As % of Total Revenue (RHS)

• New regulations have reduced Safaricom’s competitive advantage

• Equity Bank’s Equitel presents strongest threat with low cost services

Kenya MFS Competitive Landscape – Q115 Safaricom M-Pesa Revenue

Source: Communications Authority of Kenya, Safaricom Source: Safaricom

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East Africa

Vodacom 47%

Tigo 29%

Airtel 21%

Zantel* 3%

MTN 58%

Airtel 27%

Uganda Telecom

11%

Africell 4%

MTN 52% Airtel

25%

Tigo 23%

MFS Market Shares – More Even Competition

Drives Service Innovation

* = Tigo acquired Zantel in June 2015. Source: BMI, Operators, Regulators, National Banks

• Interoperability

− Tanzania: Tigo, Airtel,

Zantel – Vodacom joined

later

• Remittances

− Cross border

interoperability

− Tigo first, followed by Airtel

and MTN – M-Pesa deal

• Interest on deposits

− Tigo Pesa (Tanzania)

began dividends in Q214

− Vodacom to follow from

July 2015

Uganda Q115

Rwanda

Q214

Tanzania

Q414

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• Mobile operators specifically excluded from MFS licences

• More than 20 licensed MFS providers creates a fragmented market

• Banks more risk averse and lack operators’ distribution networks

• But bank-operator partnerships gradually learning to work around licensing

conditions to tap demand

Nigeria – Regulations Stifle Growth

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Number of Mobile Payment Transactions ('000)

Value of Mobile Payment Transactions (NGNbn)

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Mobile As % of Total Transactions Mobile as % of Total Value

Mobile Payments Beginning To Gain Traction... ...But Still A Minor Share Of Total Payments

Source: Central Bank of Nigeria

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• Similar regulatory hurdles for telcos as in Nigeria

• Less need for MFS – financial inclusion more than twice the regional average

• Good reach of traditional banking networks – 27,000 ATMs and 360,000 PoS

• MFS take-up starts in urban areas and gradually extends to rural areas for domestic

remittances – but high banking penetration limits demand for MFS from urban consumers

Therefore stronger growth opportunities in the mobile banking segment than for

operator-led initiatives

South Africa

Vodacom M-Pesa KPIs – March 2015

Source: Vodacom

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Registered Users Active in Quarter Active in Month

Source: BMI, World Bank

2014

28.4mn 3G/4G subs

34.7% of mobile market

2019

38.7mn 3G/4G subs

44.7% of mobile market

South Africa

Sub-Saharan

Africa

(developing only)

Account at a financial institution (% age 15+)

68.8

28.9

Mobile account (% age 15+)

14.4

11.5

Number of people who have account at financial

institution (mn)

25.8

148.3

Number of Mobile Money Accounts (mn)

5.4

59.1

Number of people who made a mobile banking

transaction (mn)

7.5

31.3

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• Growth Drivers

– Broader range of users: B2B transactions, government

salaries

– Greater range of services: loans, savings, remittances

– Sector specific financial services: insurance,

agriculture, education, retail (online and offline)

– MFS meets financial markets: Kenyan government

plans to offer government bonds over MFS

The Future Of MFS

426 666 845 1,077 1,319 440 686

842 979

1,151

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751

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Deposits P2P Transfers Withdrawals Other

+ 84%

+ 31%

+ 27%

+ 33%

• Tighter Regulations The Key Risk

– Kenya and Ghana are bringing

MFS providers under Banking

regulations

– As transaction volumes and

services grow other countries will

follow suit

Safaricom M-Pesa Total Transactions (KESbn)

Source: Safaricom

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