March 31, 2022

Merchant Mobile Payments Nearly Doubled in 2021, According to GSMA's Annual Report on the Mobile Money Industry

"Over the past decade, mobile money has expanded from a niche offering in a handful of markets to a mainstream financial service, moving millions of households in low- and middle-income countries (LMICs) from the informal cash economy into a more inclusive digital economy," according to GSMA's State of the Industry Report on Mobile Money 2022. Available in English and Français, the GSMA, a UK-based organization that aims to unify the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change, adds: "In 2012, there were 169 mobile money deployments in 71 countries. Ten years on, the number of live deployments has almost doubled to 316 and expanded to 98 countries worldwide."

A product of GSMA's Mobile Money program, which works to accelerate the development of the mobile money ecosystem for the underserved, the report examines the following major industry trends of 2021:

1. A trillion dollars transacted as the industry diversifies. "In 2021, the mobile money industry processed more than $1 trillion in transactions. The year-on-year increases in transaction values have been driven by new customer uptake and a growing number of mobile money use cases. For example, in 2012, ecosystem transactions such as bill payments, bulk disbursements, merchant payments and international remittances accounted for less than 10 percent of overall transactions. Ten years on, this has risen to 20 percent, a clear sign that mobile money providers are embracing diversification."

2. Mobile money adoption and activity continue their upward trajectory. "In 2021, the number of registered accounts reached 1.35 billion globally, up 18 percent since last year and 10 times more than there were in 2012 (134 million). 518 million of these accounts were active on a 90-day basis and 346 million on a 30-day basis, growing nearly 15 times and 13 times respectively since 2012. The volume and frequency of transactions also registered strong growth. In 2021, more than 1.5 million person-to-person (P2P) transactions were made every hour on average, compared to fewer than 68,000 in 2012, and the average account makes 3.5 P2P transactions per month."


3. Agent networks continue to thrive. "Between 2012 and 2021, the number of active agents grew more than 10 times, from 534,000 to 5.6 million, unlocking access to financial services for the most underserved customers. Despite closures and restrictions on movement during the COVID-19 pandemic, the value cashed in and digitized via mobile money agent networks grew by 18 percent in 2021, reaching a total of $261 billion or more than $715 million a day. Even the most established agent networks registered strong growth, with the 25 largest networks growing by more than 25 percent on average from 2020 to 2021."

4. Regulatory challenges persist. "Despite the huge success of mobile money services in many countries, in others, the sustainability of mobile money services is threatened by certain policy and regulatory interventions, from taxes on transactions to poorly implemented instant payment solutions and costly data localization mandates. The high cost of compliance is shared by mobile money providers and customers alike with potentially negative consequences on future investments in, and customer usage of, mobile money services. Dialogue between policy makers, regulators and industry leaders is of paramount importance in order to prevent adverse policy and regulatory interventions."

5. Merchant payments nearly doubled. "After a momentous year for merchant payments in 2020, in 2021 they nearly doubled, reaching an average of $5.5 billion in transactions per month and accounting for 21 percent of the value circulating in the mobile money system (P2P + merchant payments), up from around 10 percent in the past two years. Uptake has been in part driven by the number of businesses actively accepting and receiving mobile money payments."

6. International remittances are still flowing fast. "Two years on since the onset of the COVID-19 pandemic, diasporas around the world increasingly send money home using mobile money. The number of international remittances sent and received via mobile money grew by 48 percent in 2021, reaching $16 billion. Still, mobile money represents less than three percent of all remittances globally, meaning there is significant potential to digitize remittances and offer faster and more affordable ways to send money worldwide."

7. Bill payments leapt again in 2021. "Like other ecosystem transactions, the number of bill payments processed via mobile money leapt in 2021, growing by 37 percent to exceed $5 billion in transactions per month. For customers, mobile money-enabled bill payments can unlock access to a range of new services, such as off-grid energy, and help low-income users build economic identities. For government agencies and utility companies, mobile money-enabled bill payments can make revenue collection more efficient and cost-effective, strengthen financial transparency and circumvent fraud."

8. Bulk disbursements are seeing remarkable growth. "After registering 28 percent growth in 2020, mobile money-enabled bulk disbursements grew by another third in 2021, topping $65.8 billion. This growth is likely due to an uptick in salary payments as more and more employers turned to mobile money to pay their employees, with the number of unique accounts receiving salaries via mobile money increasing. The number of unique accounts receiving Government-to-person (G2P) payments were also up, as governments forged new partnerships with mobile money providers to deliver pandemic relief and other forms of social support."

9. Savings, credit and insurance are building financial resilience. "According to our Global Adoption Survey, approximately two in five (44 percent) mobile money providers offer credit, savings or insurance products. Uptake of these products in 2021 was encouraging across mature mobile money markets while they also gained traction in less mature markets, where customers are seeking out products to help protect their families and businesses against uncertainty and crisis, invest in their livelihoods and improve their standard of living.

10. Partnerships are pushing interoperability. "After recording exceptional growth in 2020, the value of transactions flowing between banks and mobile money platforms also grew quickly in 2021, up 46 percent, more than doubling since 2019. The continued acceleration of these types of transactions confirms the complementary relationship between banks and the mobile money industry that has been observed in the past few years, confirming mobile money’s key position in the financial ecosystem."

11. The mobile money gender gap is holding women and economies back. "Across LMICs, women are still less likely than men to own a mobile money account. This is due to a variety of reasons including not owning a mobile phone, lack of awareness of mobile money and lack of perceived relevance, knowledge and skills. Encouragingly though, once women have a mobile money account, their likelihood of using it is almost on par with men. As part of the GSMA Connected Women Commitment Initiative, 26 mobile operators across Africa, Asia and Latin America have made formal commitments to reduce the gender gap in their mobile money customer base since 2016."

12. Mobile money is enabling access to humanitarian assistance, utilities and agricultural solutions. "Mobile money is an enabler of many other services that can help solve critical socio-economic and environmental challenges, such as providing access to essential utilities, sustaining the livelihoods of smallholder farmers and delivering rapid financial relief to vulnerable populations. For mobile money providers, these use cases represent valuable opportunities to diversify, which many have already embraced."



The report concludes by explaining that "2021 has shown how the scale and power of mobile money can build a more inclusive world. Behind the numbers and milestones in this report are hundreds of millions of people participating in a more inclusive digital economy." What is more, "Individuals, communities and the public, private and non-profit sectors are all reaping the socio-economic benefits of mobile money."

The GSMA further says "even more profound benefits are possible if the industry and all stakeholders can catalyze efforts, reducing the mobile gender gap and meeting diverse customer needs to activate the billion registered customer accounts that are currently so infrequently used. In practical terms, this can also mean delivering more fast and secure cash transfers among the over 235 million people in need of humanitarian assistance; providing credit, insurance and other risk management tools to more of the nearly 500 million smallholder farmers growing a third of the world's food; and opening further access to affordable, reliable and safe water, energy and sanitation among the more than 1.2 billion people without access to core urban services."

It is encouraging to read how mobile money continues to grow rapidly, bringing a suite of financial products to hundreds of millions of users worldwide and disrupting traditional financial services. Moreover, mobile money is providing significant growth in merchant payments and enabling access to humanitarian aid, utilities and agricultural solutions. Nevertheless, while I recognize recent improvements to increase financial inclusion for women, more must be done to eliminate the mobile gender gap.

Are there aspects of GSMA's report on the mobile money industry that you found of particular interest?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

March 25, 2022

Understanding How the War in Ukraine Will Change Business

Since Russia's unprovoked invasion of Ukraine on Feb. 24th, 2022, I have held several conversations with colleagues asking how the war will change business. A report published by The Economist Intelligence Unit (The EIU) aims to address this question by noting: "Although primarily a humanitarian disaster, the Russia-Ukraine conflict will also accelerate changes already provoked by the pandemic, US-China tensions and climate change."

The EIU presents five ways in which the war in Ukraine will change business:
  1. The war will add to supply-chain disruptions in sectors such as automotive, increasing the pressure for localization.
  2. A surge in energy and other commodity prices will hasten public- and private-sector efforts to improve food security.
  3. The investment needed to reduce Europe's reliance on Russian energy will affect funding for clean-energy investments in developing countries.
  4. Financial sanctions against Russia may accelerate the transition from US dollar-backed financial systems to interoperable central bank digital currencies (CBDCs).
  5. Geopolitical tensions over technology (already central to the US-China trade war) will intensify as Russia curbs internet access and faces technology sanctions.

Among the five points presented by The EIU, three are worth exploring more deeply. "Supply chains have already been disrupted by the pandemic, as well as the earlier US-China trade war," the report says. "The difficulties caused by the Russia-Ukraine war will prolong these disruptions and place added pressure on companies in sectors such as automotive to shorten their supply chains and build resilience. This may mean increasing stock of major components, reining in just-in-time production norms or investing in more local suppliers."

As for price increases in commodities driving adoption of sustainable food policies, "The war in Ukraine will keep fuel and commodity prices elevated for much of the year. This will not only raise business costs, but will also heighten existing concerns about energy and food security." Moreover, "The war is already forcing several governments to examine their food and agricultural policies closely, not just in Europe, but also in the Middle East, Singapore and China, among others."

In a separate article, The EIU explains says it expects the "average grain prices to rise by almost a third this year, on top of the 40% increase recorded in 2021" and "prices of sunflower seed oil to increase rather than fall in 2022, as originally forecast before Russia's invasion; prices increased by nearly 60% in 2021."

With respect technology becoming increasingly geopolitical and regionalized, this is happening in two ways. "First," according to the report, "access to technology is seen as a competitive advantage for countries, as evident in US attitudes towards semiconductors. Because the chip sector is fragmented and the product is complex, every actor will need to use US equipment at some point; therefore, any US technology sanction makes a country or company unable to purchase semiconductors."

As for the second way, "the internet is becoming more national and less global. China has driven this change by using a national firewall to restrict access to content that its government deems dangerous—a measure that Russia wants to adopt. The EU, through its values-led approach to data privacy and regulation of artificial intelligence, has also created regional barriers to the internet."

However, the report importantly notes: "This regionalization of the internet will not necessarily lead to a 'splinternet,' where different systems are completely separate and not interoperable. The broader battle is between the US, which wants to retain the multistakeholder governance model of the internet (open, decentralized and industry-led), and China, which wants a cyber-sovereignty model (closed, centralized and country-led). However, the tensions are not just between democracies and autocracies, but also between blocs, as the relationship between the US and EU shows."

The EIU published a subsequent report presenting ten ways the war in Ukraine will change the world:
  1. Russia's war in Ukraine will bring about a new division of Europe.
  2. Russia's violation of Ukraine's sovereignty signals the end of the post-cold war order.
  3. The war in Ukraine will deepen Russia's strategic alliance with China.
  4. Russia's actions accelerate the bifurcation of the world into two hostile, competing camps.
  5. A renewed focus on European security will constrain the US tilt to Asia.
  6. The war in Ukraine will accelerate a global arms race.
  7. Germany may begin to play a more assertive role in European security policy.
  8. Europe will be forced to decide where it stands in the new global order.
  9. The challenge to global democracy will become more pronounced.
  10. The war in Ukraine will embolden others and inflame existing conflicts.
With respect to the first point of Russia's war bringing out a new division of Europe, The EIU points out that "Russia's brutal invasion aims to destroy Ukraine's sovereignty and prevent the country from ever joining NATO or the EU. Russia intends to annex at least part of Ukraine, thereby creating a buffer zone between Russia and the West that also includes Belarus and Kazakhstan." Moreover, "Russia's repudiation of the Western-led 'rules based order' signals a turning away from Europe and the creation of a new division of the continent, three decades after the fall of the Berlin Wall."

More troubling is how Russia's actions will accelerate the bifurcation of the world into two hostile, competing camps. As the report explains, "China and the West have been competing for several years to establish dominance in the industries and technologies of the future and to prepare the ground for a future decoupling. The coronavirus pandemic has reinforced this trend, fostering a move towards regionalization and away from globalization." What is more, "By bringing about a decisive rupture with the West, Russia's actions will speed up the division of the world between two rival poles. Some countries will take sides, but many others will seek to maintain a foot in both camps. As time goes on, this balancing act will become increasingly difficult."


I appreciate how The EIU's first report explores the impact Russia's unprovoked war with Ukraine will have on key global industry sectors and the risks these present to businesses. The second analysis also serves as a useful tool in outlining how the conflict will influence the global balance of power and lead to a further unravelling of the post-Cold War order. The situation in eastern Europe has increased several risk factors businesses will need to navigate.

How is the war affecting your business?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

March 5, 2022

Challenges, Opportunities, and Strategies for Data Protection and Digital Rights in Africa

Promoting the benefits of a digital economy in Africa is a topic of regular discussion on this Forum. As referenced in the previous post, Africa is seeing a rapid growth of startups led by entrepreneurs who are developing innovative products and solutions for people across the African continent. Similar to Europe and North America, data protection and the securing of digital rights in Africa, the home of approximately 1.4 billion citizens, are persistent challenges. Therefore, it was with great interest to read a Note, as it is formally called by the Stanford Technology Law Review, entitled "Africa in the Information Age: Challenges, Opportunities, and Strategies for Data Protection and Digital Rights."

Authored by Justin Bryant in 2021 while matriculated at Stanford Law School, Mr. Bryant asserts that the "contemporary data protection landscape on the African continent must be tailored to better address the needs of young, vibrant, entrepreneurial societies and resonate with the values therein. Toward this end, this Note issues recommendations aimed at creating effective legal and extralegal enforcement mechanisms. The implementation of these recommendations stands to position the continent well in the years to come and amplify the voices of African nations in the evolving global dialogue."

Providing case studies from six countries (Angola, Ghana, Mauritius, Nigeria, South Africa, and Tunisia), Mr. Bryant notes that "the divergent development of data protection laws across the continent while simultaneously underscoring how common predominant influences—including past and present vestiges of colonialism— have left Africa short of effectiveness on this front."

General Data Protection Regulation (GDPR) is the European law on data protection and privacy in the European Union (EU) and the European Economic Area (EEA). And, as Mr. Bryant explains, GDPR "has quickly become the global standard for data protection law since coming into effect in 2018." While substantively different than GDPR, the state of California followed the EU's move in passing data protection legislation with the California Consumer Privacy Act or CCPA. Many people worldwide are watching whether GDPR or CCPA will become the standard regulatory framework for other nations. Experts whom I have spoken with, suggest GDPR, as a law that binds multiple nations, may be the prevailing model.

Could a data protection and privacy policy similar Europe's or California's be adopted in Africa? Mr. Bryant says while "The Information Age presents endless possibilities for African countries ... they will not be able to take full advantage of these possibilities by governing the digital space with laws that do not meet their particular contexts, challenges, and circumstances. As global standards form in this arena, African nations should be contributors, not simply adopters."

With respect to compliance challenges in Africa, the Note insightfully points out that "While country-level legislation on data protection is being enacted in Africa, it is important to remember that most African countries still do not have comprehensive legal frameworks for data protection, and those that do face considerable obstacles in enforcement." Furthermore, "As major gaps exist in Africa's data privacy landscape, challenges will persist for years to come."

Mr. Bryant's Note covers other key topics such as the transplant effect and consequences of the status quo, creating community-based models for norm diffusion, and a thoughtful discussion on threats posed by international actors in Africa's digital space. But his conclusion, in part, is something stakeholders in Africa should pay particular attention to:
It is long past time for African stakeholders to have productive discussions to identify their priorities in internet governance with an eye towards the continent's youth and desired position in the decades to come. There must be a diversity of voices and perspectives at the table so lawmakers can comprehensively understand the needs of various constituencies. There must be honesty and transparency surrounding the relationship between the government and its citizens and clarity surrounding boundaries set in constitutions. Once legislation is ratified, African leaders should see that implementation follows as soon as possible thereafter, and aim to stick to predetermined timelines to create confidence in these laws.
As the mentioned in the previous blog post, Africa, with a youthful and increasingly educated population, will see a dramatic rise in new tech startups for years to come. The success of these startups, however, will depend on fair, transparent, and consistent legal regulations across a wide-array of areas including data protection and digital rights. Consumers and enterprises alike in the West have enjoyed the benefits of the innovative products and services created since the dawn of the internet age of the 1990s. However, there is continuing abuse by some tech companies that are infringing on the privacy of individuals. It is my hope that African stakeholders learn these lessons when creating and implementing policies to their unique constituencies.

Do you agree with Mr. Bryant's findings? What strategies do you recommend for how to improve the data protection landscape in Africa and protecting the digital rights for all Africans?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

March 3, 2022

How to Reduce Africa's Reliance on Commodities

"Despite being home to 17% of the world's population, Africa is an underinvested market," a newsletter published by Morgan Stanley, a financial services firm, says. The newsletter also points out that "72% of investors surveyed do not currently invest there. We believe that despite near-term challenges, the continent offers compelling long-term opportunities vis-à-vis private markets and infrastructure."

Moreover, "Africa's median age, at 19.7, is considerably lower than those of Asia and South America, at 32.0 and 32.1, respectively. Furthermore, according to the World Economic Forum, Africa is expected to have the world's largest working-age population by 2034. The expected increase in the working-age population will likely promote middle class growth, building on trends already in place."

As an investor and entrepreneur, I appreciate how these statistics represent future opportunities. However, as an advisor to several officials representing African nations, I wish these leaders understood the importance of these statistics and the opportunity that exists for the citizens they represent. In my conversations with African government officials, I am often asked for my opinion on how to attract foreign direct investment to grow their private sector. While I strongly advocate for establishing policies and making investments to build a thriving digital economy in Africa, these officials mistakenly focus our conversation on how to increase their overdependence on raw materials and commodities such as minerals, oil, gas, and lumber.

Even The Economist notes that "many African economies have relied too much on raw materials for too long." The article further explains that "The UN defines a country as dependent on commodities if they are more than three-fifths of its physical exports. Fully 83% of African countries meet that threshold, up from 77% a decade ago. Some depend on produce such as tea, but most rely on mining or on pumping oil. When commodities crashed in 2015, foreign direct investment (FDI) and growth tumbled and have yet to fully recover."

The article importantly adds: "Broad averages obscure some of the progress that has been made to diversify economies. Over the past decade resources have become less important to GDP. The share of commodities in goods exports from the continent as a whole has fallen, too. And in countries such as Botswana and Malawi, services have grown strongly. Even manufacturing is rebounding."

However, "Africa has a long way to go if it is to break free of the resource curse. In countries rich in diamonds or oil, political power can be a license to loot. So unscrupulous folk are tempted to grab and hang on to it by any means available. Resource-rich countries are more likely to suffer dictatorships, and also tend to have more and longer civil wars."

Building a thriving economy while strengthening government institutions with better transparency and will require investments in education and infrastructure. Using Sierra Leone as an example, The Economist says the west Africa nation "now spends about 21% of its budget on education, up from 13% in 2017. As a result, more youngsters are passing their final exams than ever before. Mining began in Sierra Leone about a century ago. 'If we had invested in humans for a hundred years,' sighs David Moinina Sengeh, the education minister, 'we would be in a much better place today.'"

While I agree with the authors of Morgan Stanley's newsletter that many investors are missing out on lucrative opportunities in Africa, there is evidence this is changing. As reflected in the chart at the top of this post, African startups raised $4.4 billion in 2021, which was more than 2.5 times the amount raised in the previous year, according to "Africa: The Big Deal," a website managed by Max Cuvellier and Maxime Bayen.

With respect to specific sectors, fintech startups raised $2.3 billion from investors last year (see chart below). While this sector captured 53% of funds raised, other key sectors such as energy, retail, healthcare, education, and logistics and transportation are also on the rise.


I do not completely believe the notion that institutional investors in America or Europe are investing in African startups because they see the market as a great investment opportunity. Their investment is a result of chasing higher yields since the average junk-bond yields in America and Europe are 5.1% and 3.3%, respectively, well below inflation. And while there is good reason to cheer the recent increases in investments on the continent and the revenues some of these startups are reporting, I am still waiting for announcements of profitability and successful exits through an initial public offering or acquisition. Nevertheless, as someone who has supported tech startups in Africa for over 20 years, I am optimistic that the trend in the number of investors, amount raised, and overall number of startups on the continent will continue to grow for years to come.

I look forward to future conversations with government leaders in Africa on how to reduce their reliance on commodities by investing in education and infrastructure. Such investments will only help their growing working-age population enjoy the fruits of a middle-class lifestyle.

What opportunities and risks are you seeing in Africa's startup ecosystem?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

March 1, 2022

Adoption of Mobile Internet Services Has Not Kept Pace With Expansion of Network Coverage, Says GSMA's Annual Global Mobile Economy Report

"In 2021, the number of mobile internet subscribers reached 4.2 billion people globally," according to GSMA's report entitled The Mobile Economy 2022, which provides the latest insights on the global state of the mobile industry. The report reveals continued momentum in 5G adoption, with the total number of 5G connections expected to reach one billion in 2022, as usage grows rapidly in pioneer markets.

Highlighting the mobile industry's instrumental role in extending connectivity to people worldwide, the report, which is authored by GSMA Intelligence, the research and consulting arm of the GSMA, a UK-based organization representing the interests of mobile operators worldwide, notes that "Operators' investments in network infrastructure over the last decade have helped to shrink the coverage gap for mobile broadband networks from a third of the global population to just 6%." The 'coverage gap' refers to those living outside of areas covered by mobile broadband networks.

"But although the industry continues to invest in innovative solutions and partnerships to extend connectivity to still underserved and far-flung communities," the report points out that "the adoption of mobile internet services has not kept pace with the expansion of network coverage. This has resulted in a significant usage gap. In 2021, the usage gap stood at 3.2 billion people, or 41% of the global population." The 'usage gap' refers to those who live within areas covered by mobile broadband networks but do not yet subscribe to mobile broadband services.

The report's other key findings include:
  • By the end of 2025, 5G will account for around a quarter of total mobile connections, and more than two in five people worldwide will live within reach of a 5G network.
  • In 2021, mobile technologies and services generated $4.5 trillion of economic value, equating to 5% of global GDP. The report predicts that this will grow to $5 trillion in 2025.
  • As 5G adoption accelerates in leading markets such as China, South Korea, and the US, 4G begins to decline. Globally, 4G adoption will account for 55% of total connections by 2025, down from a peak of 58% in 2021.
  • But 4G still has room to grow in most developing markets. For example, in Sub-Saharan Africa, 4G adoption is below a fifth of total connections.
  • 3% billion people subscribed to mobile services, representing 67% of the global population, by the end of 2021.
  • In a growing number of markets, most adults now own a mobile phone, meaning that future growth will come from younger populations taking out a mobile subscription for the first time.

With respect to the achieving the United Nations' Sustainable Development Goals (SDGs) before the deadline in 2030, the report says "Mobile technology will play a central role in those efforts, from improving access to education and healthcare to addressing issues with poverty and inequality." The report also outlines a set of policy recommendations for achieving a resilient post-pandemic recovery. This involves investing in digital skills training, utilizing public funds for connectivity, adopting a balanced approach to collecting revenues through taxes and fees in the mobile sector, and prioritizing digital transformation in government services.

Returning to the topic of the usage gap, the reports explains:
The reasons for the usage gap are multifaceted and vary by region, but they generally relate to a lack of affordability, relevance, knowledge and skills, in addition to safety and security concerns. Furthermore, the barriers to mobile internet adoption are particularly acute among certain segments of the population, including women, the elderly, those in rural areas and persons with disabilities – or a combination thereof. Addressing the usage gap for these key groups will extend the benefits of the internet and digital technology to more people in society, and will require concerted efforts by a broad range of stakeholders working together with mobile operators and other ecosystem players, such as device manufacturers and digital content creators.
Infographic: GSMA Intelligence

What do you think of the report's findings? What solutions do you recommend for bridging the usage gap?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.