MTN Group has plans to grow its current fintech services into a standalone entity to offer various financial services to customers across Africa. The company already offers a mobile money service called MoMo in nineteen countries in Africa, but its latest plan is to structurally separate its fintech services from its traditional mobile communications.
MTN’s MoMo service saw sustained demand which translated into 24% growth in the number of registered users in the past year. Across Africa, the total number of registered MoMo users jumped to 281.6 million, of which 61 million (21%) are monthly active users. Collectively, it processed more than 6 billion transactions worth $116.3 billion (~R1.97 trillion) during this period.
The company’s current fintech services include mobile money, insurance, airtime lending and e-commerce. 4C Group of Companies provides various fintech services to mobile network operators and large enterprises throughout Africa. These include payment gateways, orchestration engines, credits & loans, as well as enterprise transaction switches, all of which are powered by our flagship iNSight software.
MTN plans to separate its fintech division
MTN Group CEO, Ralph Mupita, states that the company is making good progress with its plans to structurally separate its fintech division from the telco division. Currently, 13 of MTN’s MoMo markets have completed their fintech separation, with only South Africa, Liberia and South Sudan remaining bundled.
“We are exploring, on a very bespoke basis, strategic partnerships into the MTN Group fintech structure. We’ve always said one of the ways for us to accelerate the development of the fintech business is to bring in partners with capabilities,” explains Mupita. “We are not really looking for financial investors but institutions and partners who know the space and who can help accelerate the growth,” he adds.
Mupita also says that the separation process has already begun in South Africa and that they aim to have it completed by the end of December 2022. In addition, the group is also separating its fibre business from the rest and hopes to have this done sometime in 2023.
MTN Nigeria making the most progress
MTN Nigeria has already been given approval for a Payment Service Bank (PSB) license from the central bank. The MoMo PSB has been launched and has already garnered 4.2 million registered mobile money wallets. “We are pleased with the progress since the launch and are excited about the prospects of our fintech business and driving financial inclusion in the country,” says MTN Nigeria CEO, Karl Toriola.
Within its first six weeks of operations, MTN Nigeria’s PSB generated 7 million MoMo transactions and increased fintech revenue by 27.8%. It also added over 37 000 new MoMo agents in this period, taking its total number of registered mobile money agents to over 800 000. The company’s goal is to set up the continent’s largest MoMo wallet base in Nigeria by converting banked users to mobile money.
African governments introducing taxes
With such a rapidly increasing subscriber base for mobile money across the continent, many countries are introducing taxes and levies on fintech services. As the competition within the fintech sector increases, so the regulatory environments become more complex.
“The introduction of fintech taxes in some markets has slowed growth in Q2 (2022), but we remain encouraged by the ecosystem growth as users, agents and merchants continued to grow healthily during the period under review,” says Mupita.
MTN Ghana, MTN Benin and MTN Cameroon are three such markets that have been impacted by new government taxes and levies. In May 2022, Ghana’s agents had to implement a 1.5% e-levy on MoMo transfers as a result of taxes. Despite this, its MoMo revenue grew by 9% to $106 million (~R1.8 billion).
Representatives from MTN Ghana have said that they are monitoring consumer reactions to these new levies. “We have implemented a 25% fee reduction to lessen the impact of the levy on customers along with campaigns to educate customers on the e-levy and changes implemented,” the company said in a statement.
As mobile money becomes a more popular way to transact in Africa, more and more telcos are joining in by offering their own fintech services. 4C Group is an enabling technology provider in this field and can build capable, scalable ecosystems for telcos and enterprises that want to offer fintech services. For more information about our fintech offerings and software, please contact us today.
At 4C Group of Companies, we strive to effect operational changes and cost savings for customers through our iNSight product and associated services. This product’s main function is to re-purpose and deliver business-critical information to a variety of systems and stakeholders.
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