* Mobile banking in Africa to hit $22 bln by 2015-consultant
* Network-agnostic startups seek to gain an edge
* Remittance flows could get tapped
By Simon Akam
FREETOWN, Jan 26 Remigius Okafor's hair-care
products distributors used to risk theft by carrying thousands
of dollars into Sierra Leone's ramshackle capital to pay him for
But now the majority pay him with their cellphones, using
one of a variety of mobile banking technologies that are
competing for a rapidly growing African market.
"It is very, very convenient," Okafor said, sitting at the
back of a tunnel-like store hung with weaves and other hair
extensions. "The agent is happy because he finds it difficult to
waste a whole day at the bank."
Mobile banking is expected to grow into a $22 billion
industry across Africa by 2015 on the back of skyrocketing
cellphone use and growing demand for financial services,
according to consultancy Juniper Research.
But the competition for that market could prove messy in the
coming years, pitting a fragmented field of network operators
against each other, and all of them against a new breed of
mobile banking company that seeks to be network agnostic, which
means customers are not tied to one phone network.
"Where we'll end up will ultimately be driven by a mixture
of regulation and market forces," said Leon Isaacs, CEO of
consultancy Developing Markets Associates. Getting there "will
be a painful process," he said.
Early successes include Safaricom's (SCOM.NR) M-PESA mobile
banking service in Kenya. Launched in 2007, the service - which
can only send money from a Safaricom SIM - now has over 10
million users and transfers about $350 million per month.
But analysts say the M-PESA model, while impressive, may not
translate elsewhere in Africa where a more competitive landscape
of cellphone networks in many countries may make a
network-agnostic approach more suitable.
Regulators in Nigeria, Africa's most populous country, for
example, have already decided that mobile money services in the
country must be interoperable.
But in Sierra Leone, in a possible indication of the future
of the sector, a battle is emerging between network-specific and
network-agnostic banking services.
The Bharti Airtel Ltd (BRTI.BO) Airtel Money service used by
Okafor and his distributors has only 215,000 registered
subscribers and has yet to turn a profit.
British former management consultant Ben Farren believes the
network-agnostic Splash service, which he launched in 2009, is
more suitable for local conditions.
"It's a drastically better offer to the consumer," he said.
"They should be able to transact with anybody, regardless of
what network they're on."
The Splash operation has only garnered 70,000 subscribers so
far, but Farren is bullish.
The International Telecommunications Union estimates mobile
subscriptions across Africa more than tripled to 333 million
since 2005. The World Bank said Sub-Saharan Africa averages just
163 bank accounts per 1,000 adults -- compared to an average 635
in developing countries.
South Africa's Wizzit is another start-up. Its operations
are guaranteed by the South African Bank of Athens (NBGr.AT).
Managing Director Brian Richardson will not disclose the number
of subscribers, but says the operation turns a profit.
"I do believe the bank-led model will win at the end of the
day," he explained. "The more successful the networks are in the
banking space the tighter the regulatory noose will be around
For consultant Michele Scanlon the low margins in the
industry mean small start-ups may struggle. She envisages a
hybrid model between banks and networks, both of which have
"The banks bring the compliance, but the banks aren't
innovative enough," she said. "The operators have the customer
base and a wide distributor base."
In the end though it may be the vast international
remittance market - worth some $400 billion per year - that
decides which option is eventually most successful.
Isaacs believes that cross-network approaches will have a
clear advantage in the field, as otherwise money transfer
companies like Western Union (WU.N) would have to partner with a
large number of proprietary operators in Africa to disburse
"The network-agnostic, or the interoperable, is going to be
much better," he said. "They'll be able to get the money
everywhere through one pipe."
(Editing by Richard Valdmanis and Jane Merriman)