NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, July 24, 2015

JOHANNESBURG—Africa’s biggest telecommunications companies are striking deals allowing their customers to make payments across networks and borders, the latest stride in the continent’s ascent as a leader in mobile financial technology.

Starting this month, London-based Vodafone Group PLC and South Africa’s MTN GroupLtd. plan to allow customers in East and Central Africa to send each other money, the first time Africa’s biggest telecoms have cooperated in the competitive mobile payment space.

Their new partnership could spur even more economic growth in these fast-growing markets, and drum up revenue for mobile companies in countries where demand for new cellphones and airtime has matured. Fierce competition is one reason MTN lost revenue per user in 19 of its 22 markets in the first quarter, MTN said.

“Finally, [telecoms] woke up and smelled the coffee,” said Hans Kuipers, a Johannesburg-based partner at the Boston Consulting Group. “In order to really develop a healthy ecosystem, you have to develop interconnectivity.”