MARCEL MBAMALUIn the previous report, we identified four types of domestic and cross-border IPS in Africa based on the payment instruments and interoperability arrangements adopted. They are cross-domain, bank, mobile money, and sovereign currency. Cross-domain IPS (IPS serving across countries/regions) are the most prevalent, followed by bank IPS and then by mobile money IPS. These IPS are served by 29 live domestic systems across 21 countries and three live regional systems. Three new systems, EthSwitch (Ethiopia), Virement Instantané (Morocco) and PayShap (South Africa) went live. Three systems, Meeza Digital (Egypt), MauCAS (Mauritius), and eKash (Rwanda), have been reclassified as cross-domain IPS. Meeza Digital and eKash had been classified previously as mobile money IPS and MauCAS was a bank IPS in SIIPS 2022.
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In the instant payment system (IPS), mobile money predominates because users make frequent small payments for transactions. As already noted, despite its prevalence, mobile money still accounts for an insignificant 29% of total IPS, while banks take the lead in mobile money transactions. Many countries are covered by regional IPS systems, which overlap in their services, posing some hurdles in the achievement of scale in terms of the functionality of the key instruments such as e-money, person-to-person (P2P) and person-to-business (P2B) use cases, and unstructured supplementary service data (USSD). The functionality of the instruments is critical to the various IPS, because the instruments hold the key to achieving inclusivity and meeting the payment needs of end users.
To improve the functionality of the system, Central Banks in countries retain their position as key payment and infrastructure actors, together with private sector and infrastructure players and industry associations. Again, roles overlap in terms of IPS ownership and governance. For instance, from being the chief regulators, central banks are also known to function as owner, overseer, settlement agent, or, in some cases, operator.
Private operators also act as system operators much like central banks. According to the 2003 State of Inclusive and Instant Payment Systems (SIIPS) in Africa, “15 system operators are privately-owned, and private companies also play a key role as owner and in system governance. In some cases, the various roles (apart from settlement agent) are fulfilled by industry associations.” In the end, while some schemes depend on bilateral agreements to assign roles, the particular governance arrangement is often determined by the ownership structure.
The report also notes that “banks and MMOs, for their part, serve as key IPS participants. Commercial banks are the primary players in cross-domain systems, followed by bank participants and then mobile money operators, MMOs (in contrast, MMOs dominate in mobile money IPS). Standard Bank Group and Ecobank participate in most systems. The four MMOs with the largest IPS footprint are Airtel, MTN, Orange Mobile, and Vodacom (whose footprint includes Safaricom in Kenya). Fintechs play a vital role along the IPS value chain by providing innovative technologies to end-users, IPS operators, and payment system providers. They typically partner with direct participants to provide front- or back-end services, but as technical service providers they are facilitators rather than system actors”.
In 2023, inclusivity remained a challenge
In terms of optimum value for the owners/regulators, operators and end-users, IPS has not achieved maximum inclusivity so as to qualify as “mature”. As shown “in the IPS Inclusivity Spectrum in Figure 1, most systems either are unranked or meet only basic-level inclusivity criteria”.
The 2023 SIIPS report shows that “The five progressed IPS are all on their way to the mature level. These include four domestic systems covering three countries (Ghana, Malawi, and Zambia) and one regional system serving six (Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, Gabon). As a result, nine countries have access to progressed IIPS functionality as of 2023. The two systems in Ghana, however, have plans to roll out an expanded set of use cases, which will bring them closer to maturity. Transparent consumer recourse mechanisms remain the most complex element to implement”.
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Few, but Super Users
So far, among the five countries sampled (Cameroon, Malawi, Morocco, Rwanda, and Senegal) in the 2023 consumer survey, the evidence shows that users are still comparatively small overall, though with more of what the report refers to as super users. The later refers to adults who make or receive a payment at least once a week. According to the survey, ‘nearly 70% of surveyed digital payment users, on average, make a digital transaction at least once a week, meaning they are “super-users”’ (Figure 2).
The report interprets the figure to show that various user groups and genders have different usage patterns. For instance, there is a clear gender gap for MSMEs: male business owners report more than 30 transactions per week, on average, whereas female business owners report only 24. Age has an impact on digital payment usage as well, but the extent of its influence differs according to country. A majority of younger users, aged 30 and below, have embraced digital payments more than their older counterparts. This is attributed to the tendency of the younger users towards innovation as well as the urge to engage in mobile and e-commerce opportunities. However, older people have higher levels of opportunities to use digital payments, as a result of higher income and expense obligations, and thus use them more frequently.
What end users need?
The governance structure of IPS seems complex and is geared towards maturity in achieving value and scale in operations towards end-user value propositions. As complex as the system seems, it must guarantee functionality and trust, which are central to driving digital payment adoption, especially for women, who have been reported to have more problems with digital literacy, and access to phones and the internet.
Countries are being encouraged to address “the several barriers to and drivers of use, including access challenges, usage constraints, and limits to habitual use. Addressing these will help to create the network effects needed to achieve scale”. Consumers in the surveyed countries still report problems of phone ownership and internet access. While it is not expected that the IPS should directly solve these problems by providing phones and internet access, it is still “entirely within the control of participant PSPs to establish agent networks to enable access for those without devices and/or digital literacy. Agent networks and their interoperability can be encouraged and promoted by IPS.”
Secondly, digital illiteracy limits full benefits from IPS by many end-users, who also suffer from a lack of trust and capacity to use the services. In light of this, the report recommends using marketing campaigns and agent outreach to drive digital adoption, including for women. This is especially based on the finding that “micro business owners and infrequent income earners were most likely to say digital payments hold limited value”. The report also notes that unreliable mobile networks, lack of widespread acceptance of digital payments by merchants, transaction costs, and complex user interfaces affect users’ ongoing engagement with digital payments. To this end, “agents must play a key role in educating and assisting users with specific transactions, managing issues that arise, and supporting consumer recourse”.
Dr Mbamalu, a Jefferson Fellow, is an Editor, Publisher and Communications Consultant. Follow on X: @marcelmbamalu
Dr. Marcel Mbamalu is a communication scholar, journalist and entrepreneur. He holds a Ph.D in Mass Communication from the University of Nigeria, Nsukka and is the Chief Executive Officer Newstide Publications, the publishers of Prime Business Africa.
A seasoned journalist, he horned his journalism skills at The Guardian Newspaper, rising to the position of News Editor at the flagship of the Nigerian press. He has garnered multidisciplinary experience in marketing communication, public relations and media research, helping clients to deliver bespoke campaigns within Nigeria and across Africa.
He has built an expansive network in the media and has served as a media trainer for World Health Organisation (WHO) at various times in Northeast Nigeria. He has attended numerous media trainings, including the Bloomberg Financial Journalism Training and Reuters/AfDB training on Effective Coverage of Infrastructural Development of Africa.
A versatile media expert, he won the Jefferson Fellowship in 2023 as the sole Africa representative on the program. Dr Mbamalu was part of a global media team that covered the 2020 United State’s Presidential election. As Africa's sole representative in the 2023 Jefferson Fellowships, Dr Mbamalu was selected to tour the United States and Asia (Japan and Hong Kong) as part of a 12-man global team of journalists on a travel grant to report on inclusion, income gaps and migration issues between the US and Asia.
