Telecommunication companies have been providing various value-added services for their customers over the years. Provision of mobile money services seems to be the most profitable value added service recently. In 2019, 50 million sub-Saharan Africans created a mobile-money account via a mobile phone, representing a 12% increase compared to 2018 and bringing the total number of users up to 469 million across the region. An estimated 181 million of them are active users. The total value of the 23.8bn transactions carried out in 2019 exceeds $456bn, representing an almost 28% jump compared to 2018 and proving that sub-Saharan Africa beats all records in the sector, as this figure is 3.5 times the value of transactions recorded in South Asia, the second-highest ranked region in terms of mobile-money services.
Mobile money services provided by telecommunication companies and supported by a network of licensed agents – usually the Central Bank has experienced growth as the need for contactless payment increases globally. Airtel provides mobile money services that allows customers use their mobile number as an electronic wallet. This electronic wallet can be funded and used to make payments for goods and services. Cash value can also be withdrawn from the wallet.
In February, London-listed telecom, Airtel Africa, said it was looking to sell a minority stake in its mobile money business in a bid to raise cash and sell off some assets. One month later, the firm has found an investor as The Rise Fund, the global impact investing platform of investment firm TPG, will invest $200 million in its mobile money venture. The deal will close in two tranches — $150 million invested at first close, with $50 million to be invested at second close.
Although the investment will see Airtel Mobile Money’s value increase to $2.65billion, the stake was released in the first place so the firm can raise funds to increase its services in countries where it is operating and also service its debt.
According to Airtel Africa’s CEO Raghunath Mandava, the demand to meet the requirements needed to service tens of millions of customers in Africa who have little or no access to banking and financial services requires growth, and the partnership with The Rise Fund will help the firm realize the full potential of the service from the substantial opportunity to bank the unbanked across Africa.