Genesis was commissioned by one of the largest mobile network operators (MNOs) in Africa to establish the size of the market for local and cross-border money transfers in 16 countries throughout Africa, the Middle East and South America.
The scope of the project included, but was not limited to, a comparison of demographics, income, education, mobile penetration, income distribution and the diaspora market in the various countries. A review of the regulatory and competitive environments in a number of the countries was also conducted.
Although the depth and financial sophistication of the financial sector in sub-Saharan Africa (SSA) and other developing markets remains generally low, it has evolved considerably in a number of individual countries over the past 15 years, and significant opportunities exist in the money transfer segment.
In general, the region’s financial sectors are dominated by a highly concentrated banking industry, which plays a crucial intermediary role. However, an increasing number of central banks have adopted an informal ‘sandbox’ approach to regulation, which encourages innovation by making use of no-objection letters to certain forms of financial innovation.
It is this approach that has led to greater competition in the banking sector and to the introduction of mobile financial services (MFS) in order to serve previously underserved and unserved populations.
As a result, the Findex and FinScope datasets indicate that financial inclusion has increased considerably in recent years, driven largely by the uptake of MFS. This was made possible because a number of MNOs identified developing opportunities in MFS in 2006 and 2007, and invested significantly in both product design and physical and digital infrastructure.
The market sizing exercise conducted by Genesis resulted in the selection of a number of countries that the project team felt were best suited for the potential roll-out of the MNO’s money-transfer product.
This selection was based on macroeconomic and microeconomic indicators, country demographics, mobile penetration, the MNO’s country presence, and its local market share. The findings of the study were used to provide input into the MNO’s strategy. It has since developed into one of the largest providers of MFS in its selected markets.