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TMCNet:  Innovation Africa - Innovation Africa [African Business]

[July 06, 2014]

Innovation Africa - Innovation Africa [African Business]

(African Business Via Acquire Media NewsEdge) Innovation hubs galore Innovation hubs are continuing to spring up across Africa. According to a study of the continent's tech hubs by the World Bank, there are as many as 90 tech hubs around the region. Although South Africa hosts the most, there are signs that other countries are catching up. Kenya has already vowed to launch a tech hub in every one of its 47 counties.


Hubs are also popping up in the unlikeliest of places. For example, Orange has just established its third incubator partnership on the continent - this time in Niger. The project, called CIPMEN, is an SME incubator and aims to support cutting edge Niger-based companies that are trying to launch themselves.

There is a lot of variation in terms of the hubs that are appearing across Africa - including in terms of their aims and their size. The World Bank attests that the list is "growing on an almost weekly basis".

The majority conform to what might be described as pre-incubators or spaces where individuals can meet and bash out ideas for business enterprises. However, ICT business incubators are also cropping up.

These provide already formed but still embryonic businesses with office space and other resources, helping them to get off the ground. The business models of the hubs themselves also differ. Some rely on seed financing from outsiders like the Nokia Greenhouse Nairobi or from NGOs like infoDev's mLabs, which are based in Kenya and South Africa. Some government-driven hub initiatives are also emerging. For example, Botswana Innovation Hub is a government project, although with the help of the World Bank, it is trying to adopt a more sustainable model.

Mobile money innovation continues Africa has been the world's innovation centre when it comes to mobile money and has been so since the launch of the revolutionary mobile money transfer service, M-Pesa in Kenya in 2007.

Mobile money services are becoming increasingly popular across Africa - with around 70% of all mobile money transfers in the world taking place on the continent, according to MasterCard: 58% of the 218 mobile money service providers in the world are positioned on the African continent: 66% of registered accounts are also in the African region. Mobile money users in Africa make 77% of the world's transactions, which comes to $5.7bn, according to MasterCard.

Trends to look out for include an increasingly intense tug of war between banks and mobile operators over control of the market. It is likely that, overall, banks will try and dominate the market as they have consistently taken the lead in countries, eager to ensure that mobile providers do not push them out.

Some exceptions are emerging, however. For example, Ghana's central bank has given mobile operators the green light to offer money transfer services. The move has effectively slashed money transfer costs because of the increased competition. In terms of where next for mobile money innovation in Africa, analysts are anticipating one major trend in particular. They expect the next big step for mobile money to be merchant payments, or near field communication - which basically means paying for goods and services via mobile money in physical shops, on public transport or even online. Real movement in terms of the development of mobile merchant payment options in Africa got under way in 2013, when Safaricom launched Lipa Na M-Pesa, which means 'pay with M-Pesa' in Swahili.

It builds on Safaricom's original game-changing M-Pesa service and means that consumers can pay for goods through M-Pesa without having to pay transaction fees. Merchants pay a 1.5% commission for every transaction, compared with the 3%-5% commission traders are obliged to pay when it comes to credit card transactions.

By the end of March 2014, Safaricom had recruited 120,000 merchant retailers to participate in the service and 22,000 of these are currently active. The most recent Ericsson ConsumerLab study into m-commerce in Sub-Saharan Africa found that mobile payments for airtime top-up, merchant payments, bill payments and salary payments vary greatly between the countries in Sub-Saharan Africa. They accounted for 60% of mobile payments in Tanzania, but just 19% in South Africa and 8% in Ghana.

There have clearly been moves to increase the uptake of mobile banking payments to merchants in some countries. For example, Standard Bank, one of the major financial services groups in South Africa, has rolled out solutions to 10,000 South African merchants. The service is aimed at small businesses and will mean that retailers can take mobile payments without having to rely on a POS (pointof-sale) terminal. The service is open to all consumers and not just Standard Bank customers.

Meanwhile, in Kenya Mobikash has just introduced a mobile payment service, Lipa Sasa Na Mobikash. "With Lipa Sasa Na Mobikash, merchants across Kenya will instantly gain access to a safe platform, drastically reducing risks of handling fake currency and theft. The system will also enhance efficiency, by making it easy for merchants to manage their records better," says Mobikash Afrika's CEO, Duncan Oduor Otieno. Lipa Sasa Na Mobikash users will be able to access the merchant payment service simply by dialing the digits *365# on their mobiles irrespective of which network they are subscribed to.

Banks move in Kenyan banks are also seeking to get in on the action and compete with telecoms giant Safaricom. For example, Kenya's biggest bank, Equity Bank, in April announced that it is to hand out more than 300,000 Near Field Communication (NFC) smartphones to Kenyan retailers for free. Equity is targeting restaurants, supermarkets and other retail outlets with the complimentary devices.

"Our new MasterCard ATM cards are tap-and-go [contactless cards not requiring a pin number to be entered] hence the need to put mobile POS devices with merchants to process payments," said the company's CEO, James Mwangi. "The NFC-enabled phones and cards will help Equity Bank be well positioned to significantly increase volumes and commission from payment processing," he added.

In April, Nigeria's Teasy Mobile Money launched the NFC payments solution in Nigeria. "We are very excited with the market opportunity that this solution will bring, we believe that retail payments will seriously drive up the volume of transactions as well as grow customer confidence in the mobile payments space," said Teasy CEO Musa Ali Baba. Consumers are given NFC stickers, which are then linked into their mobile wallet, and as a result they are able to make tap-and-pay transactions. Teasy Mobile's Chief Technical Officer, Stanley Vandu says: "The choice of the Biometric/NFC technology was in line with industry standards as well as global best practices. Contactless payments have seen a steady rise in countries that have deployed such. In addition, our platform supports a whole range of services which would allow Teasy to provide a whole bouquet of financial services ranging from m-commerce, cinema to bus ticketing solutions. This is in addition to the already existing banks account transfers, airtime top-up, and bill payments".

In October last year, mobile payments companies Singapore- and US-based Bango and Nigeria-based MMIT introduced M-Iflo, a mobile merchant solution focusing on online transactions for digital content to several African countries. Beginning in key Sub-Saharan markets, M-Iflo will initially be available in Kenya and Nigeria, quickly followed by Uganda, Tanzania, and Zambia. M-Iflo is already integrated with some of the major mobile wallet providers in Africa, including Mobipay in Kenya and Stanbic IBTC Mobile Money in Nigeria. The enterprise seeks to exploit a gap in the market as many merchants are reluctant to move into mobile commerce because of the perceived risks of doing business in Africa.

"Mobile billing has been held back across much of Africa, limited by a range of technological and political risk factors," according to Bango. "Political instability in a number of sub-Saharan countries has resulted in unclear regulatory environments and a lack of proper infrastructure to support stable carrier-grade billing systems. Settlement and collection of funds is complex, with rapidly fluctuating exchange rates, varying taxes, and transfer fees," the company notes.

Jide Akindele, CEO of MMIT, says: "Unfortunately corruption remains a substantial risk within the mobile money industry in subSaharan Africa. This has resulted in a reluctance from the world's app stores and mobile brands to engage the African market." Through M-Iflo, consumers that have mobile wallet accounts in Africa will be able to select their mobile wallet provider as a way to pay during checkout when paying for things online. To verify their account, the consumer just needs to put in their wallet number. In essence, M-Iflo functions as an intermediary between mobile wallet providers and mobile merchants - with the tool verifying that the consumer has the funds to make the purchase.

Through M-Iflo, consumers with mobile wallets can also make purchases on leading app stores with top-up cards available at retail outlets - they type in a code when at the checkout of an app store. M-Iflo was made available in Kenya and Nigeria first, with Uganda, Zambia and Tanzania to follow.

Bango's CEO Ray Anderson said: "There's a smartphone boom in Africa and a frustrated demand for digital content. App stores and other merchants have been waiting for the reassurance of M-IflO, which limits the risk of doing business in Africa, and has been designed to suit the 'cash up front' instincts of the African market." Jide Akindele, CEO of MMIT, adds: "Merchants in the Western market are yearning for a suitable payment process platform that minimises their risk in the African market. We believe that our M-Iflo platform gives our clients that capability to do so. We look forward to opening up access to content store owners that are looking at the African market via Bango and MMIT's Mobile money payment processing platform." $5.7bn Mobile money users in Africa make 77% of the world's transactions, which comes to $5.7bn 'Merchants in the Western market are yearning for a payment process platform that minimises their risk in the African market' (c) 2014 IC Publications Provided by SyndiGate Media Inc. (Syndigate.info).

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