analysysmason.com RESEARCH FORECAST REPORT MOBILE MONEY IN THE MIDDLE EAST AND AFRICA: TRENDS AND FORECASTS 2015 2020 ENRIQUE VELASCO-CASTILLO and KARIM YAICI
About this report This report provides: a detailed forecast of mobile money services in the Middle East and Africa (MEA), specifically covering mobile stored value accounts (MSVAs) and advanced mobile wallets (AMWs), with sub-regional and country splits for select markets a description of the main drivers and inhibitors of adoption for mobile money services, including market and regulatory dynamics an assessment of the opportunity for mobile operators, banks, and third-party players in the value chain. GEOGRAPHICAL COVERAGE Middle East and North Africa (MEA) Sub-Saharan Africa (SSA) Individual forecasts for Egypt, Kenya, Nigeria, Qatar, Saudi Arabia, South Africa and the UAE. MAJOR KPIs Total market size Adoption by type of service Registered and active users Fee revenue by provider type Market shares by type of player CASE STUDIES Beam Wallet MTN Mobile Money Ooredoo Mobile Money (OMM) Orange Money KEY QUESTIONS ANSWERED IN THIS REPORT What is the size of the mobile wallets opportunity in MEA? How can operators capture a share of this growing market? What percentage of the opportunity can be accrued by operators, banks, electronic money licence holders, and third parties like Apple or Google? What are the key trends that will drive consumer adoption of mobile money in the Middle East and Africa over the next 5 years? What are the main success factors that determine traction and adoption of mobile money initiatives in the region? WHO NEEDS TO READ THIS REPORT Strategy executives, directors and managers within mobile operators, banks, and electronic money licence holders in MEA who are implementing mobile wallet and payment initiatives or designing the response to competitors and over-the-top (OTT) players initiatives. Vendors and software developers involved in the development and integration of mobile wallet platforms, and who wish to identify new opportunities and commercial prospects for mobile wallet players in MEA. Industry experts and observers who wish to better understand mobile operators mobile money strategies, trends, challenges and opportunities in the region. 2
CONTENTS EXECUTIVE SUMMARY RECOMMENDATIONS MOBILE MONEY OUTLOOK IN MEA MENA MOBILE MONEY FORECASTS SSA MOBILE MONEY FORECASTS MOBILE MONEY CASE STUDIES APPENDIX: FORECAST METHODOLOGY ABOUT THE AUTHORS AND ANALYSYS MASON 3
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Fee revenue (USD million) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Active users (million) Active or registered users (%) MOBILE MONEY IN THE MIDDLE EAST AND AFRICA: TRENDS AND FORECASTS 2015 2020 Executive summary: Mobile money active users in MEA will grow at a CAGR of 8% to 2020 The two most-relevant types of mobile money services in the MEA region are MSVAs and AMWs. These services can form part of operators wider digital service ecosystems and enable them to position themselves in the ecommerce value chain. 1 MEA is an extremely diverse region in terms of regulatory regimes, device and banking services penetration, as well as consumer attitudes towards electronic payment methods. Despite this diversity, it is possible to identify the main trends that will drive mobile money services adoption. This forecast emphasises active users over registered users, and highlights revenue directly accrued by operators, financial institutions and OTT players. In the Middle East and North Africa (MENA), the mobile money revenue opportunity for operators is very small (less than 0.4% of the aggregate revenue for MEA). Therefore, operators that are interested in these types of services should not expect them to be significant sources of potential revenue, but they can form part of an operator s wider digital services ecosystem, in order to position itself in the ecommerce value chain. In contrast, mobile money services in Sub-Saharan Africa (SSA) still represent an attractive revenue opportunity for operators. However, the maturity of the most successful markets (such as Kenya), and the appearance of OTT competitors, will limit revenue growth. 1. See Appendix for the definitions of mobile stored value accounts (MSVAs) and advanced mobile wallets (AMWs) used in this forecast. Figure 1: Mobile money adoption by type of service, and active share of registered users, Middle East and Africa, 2010 2020 100 40% 80 60 40 20 0 29% 32% 30% 20% 10% CSP-led MSVA Bank-led MSVA AMW Activity rate Figure 2: Mobile money fee revenue by type of provider, Middle East and Africa, 2010 2020 1 000 800 600 400 200 0 0% CSP Financial institution OTT Source: Analysys Mason Source: Analysys Mason 4
Kenya: M-Pesa s dominance has spurred regulatory changes and competition from banks and MVNOs The Kenyan market has become increasingly competitive because of the regulator s interoperability mandate, and the granting of mobile money licences to three MVNOs in 2014. Kenya is the world s most-advanced mobile money market (driven by M-Pesa s success). As of March 2015, the main players are: 1 Safaricom s M-Pesa was launched in 2007 and remains the most-successful mobile money initiative in the world. With 77.0% mobile money market share, M-Pesa is the undisputed dominant player in the Kenyan market. M-Pesa represented 20% of Safaricom s FY2015 revenue (equivalent to USD355.7 million). Airtel launched Airtel Money in 2011, which holds a distant second place with 11.7% mobile money market share. MobiKash was developed in 2008, and has 6.3% of mobile money registered users. I&M Bank s customers can make deposits and withdrawals through MobiKash s network. Mobile Pay Limited s Tangaza has 1.9% of mobile money registered users. Equity Bank subsidiary Finserve is an MVNO that provides mobile money and banking services on Airtel s network. The service has 1.5% of registered subscribers. Orange s Orange Money launched in 2010 in partnership with Equity Bank, and has 0.7% market share. Figure 23: Drivers and inhibitors of mobile money adoption in Kenya DRIVERS + INHIBITORS M-Pesa s market dominance has prompted service and business model innovation from players such as bank-led MVNOs. This continues to drive mobile money adoption, but may have a negative impact on revenue. Consumers high levels of familiarity with mobile money makes Kenya a suitable ground for innovative services. High handset penetration (73% by end of 2015). REGULATORY ENVIRONMENT Safaricom s M-Pesa faced a backlash from financial institutions when it was launched in 2007. This led to a long process of validation of the service and its security, and the tightening of controls by the regulator. Kenya s mobile market has begun to show signs of saturation: subscriber net additions have stagnated and competitors struggle to break M-Pesa s dominance. Regulated M-Pesa s success was due to a relative absence of regulation when the service first launched, and after that initial boost, the network effect compounded its market reach to a wider array of customers. The Communication Authority of Kenya (CA) regulates mobile money services. It mandated national and international interoperability of mobile money services and non-exclusivity for mobile money agents in the National Payment System Regulations 2014 bill. Source: Analysys Mason 26
CONTENTS EXECUTIVE SUMMARY RECOMMENDATIONS MOBILE MONEY OUTLOOK IN MEA MENA MOBILE MONEY FORECASTS SSA MOBILE MONEY FORECASTS MOBILE MONEY CASE STUDIES APPENDIX: FORECAST METHODOLOGY ABOUT THE AUTHORS AND ANALYSYS MASON 45
About the authors Enrique Velasco- Castillo (Senior Analyst) is a key contributor to Analysys Mason's Digital Economy Strategies research, focusing on the opportunities for communications service providers and vendors in emerging verticals such as mobile health, payments, commerce, and home automation and security. Previously, Enrique covered mobile financial services and M&A and funding activity for more than 2 years at research firm IHS, where he wrote several reports on the opportunities for mobile operators in mobile payments and venture capital investments in mobile. Enrique also has research experience in 'cleantech' and healthcare from other previous roles. Prior to becoming an industry analyst, Enrique spent 3 years as a university lecturer teaching courses on globalisation and international relations. He holds an MSc with Distinction in Cognitive and Decision Sciences from University College London, and an MA in Global Studies from the University of Freiburg. Karim Yaici (Senior Analyst) leads Analysys Mason s The Middle East and Africa regional research programme. His primary areas of specialisation include operator strategies, telecoms market developments and consumer trends in growth markets. Prior to joining Analysys Mason, Karim was an associate analyst at Informa Telecoms & Media, where he authored reports on mobile accessories and mobile applications. Prior to that, he worked as a research engineer in the Centre for Communication Systems Research (CCSR) and Vodafone. Karim holds an MSc in Information Systems Management from the University of Southampton and a PhD in human computer interaction from the University of Surrey. 46
About Analysys Mason Knowing what s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research. Research We analyse, track and forecast the different services accessed by consumers and enterprises, as well as the software, infrastructure and technology delivering those services. Research clients benefit from regular and timely intelligence in addition to direct access to our team of expert analysts. Our dedicated Custom Research team undertakes specialised and bespoke projects for clients. For more information, please visit www.analysysmason.com/research Consumer and SME services Digital economy Regional markets Network technologies Telecoms software Strategy and planning Regulation and policy Performance improvement Transaction support Consulting Our focus is exclusively on TMT. We support multi-billion dollar investments, advise clients on regulatory matters, provide spectrum valuation and auction support, and advise on operational performance, business planning and strategy. We have developed rigorous methodologies that deliver tangible results for clients around the world. For more information, please visit www.analysysmason.com/consulting 47
Research from Analysys Mason We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors, through a range of research programmes that focus on different services and regions of the world. PROGRAMMES PROGRAMMES Research portfolio PROGRAMMES Service Assurance Customer Experience Management Customer Care Revenue Management Analytics Network Orchestration Software-Controlled Networking Service Delivery Platforms Service Fulfilment Telecoms Software Market Shares Telecoms Software Forecasts Fixed Networks Wireless Networks Spectrum Network technologies Telecoms software Consumer and SME services Regional markets Mobile Services Mobile Devices Fixed Broadband and Multi-Play SME Strategies Digital economy PROGRAMMES PROGRAMMES Global Telecoms Forecasts Asia Pacific The Middle East and Africa European Country Reports European Core Forecasts European Telecoms Market Matrix Digital Economy Strategies Digital Economy Platforms Future Comms and Media IoT and M2M Solutions To find out more, please visit www.analysysmason.com/research 48
Consulting from Analysys Mason For 30 years, our consultants have been bringing the benefits of applied intelligence to enable clients around the world to make the most of their opportunities. Consulting portfolio EXPERTISE Performance analysis Technology optimisation Commercial excellence Transformation services Performance improvement EXPERTISE Radio spectrum auction support Radio spectrum management EXPERTISE Policy development and response Margin squeeze tests Analysing regulatory accounts Expert legal support Media regulation Postal sector costing, pricing and regulation Regulatory economic costing Net cost of universal service Regulation EXPERTISE Transaction support Commercial due diligence Regulatory due diligence Technical due diligence Spectrum policy and auction support Strategy and planning EXPERTISE Market research Market analysis Business strategy and planning Market sizing and forecasting Benchmarking and best practice National and regional broadband strategy and implementation To find out more, please visit www.analysysmason.com/consulting 49
PUBLISHED BY ANALYSYS MASON LIMITED IN OCTOBER 2015 Bush House North West Wing Aldwych London WC2B 4PJ UK Tel: +44 (0)20 7395 9000 Fax: +44 (0)20 7395 9001 Email: research@analysysmason.com www.analysysmason.com/research Registered in England No. 5177472. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only. Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party.