Adoption of digital payment technology is on the rise across the African continent and technology providers like Mastercard are at the centre of it. Ebehijie Momoh, Senior Vice President, Mastercard West Africa speaks to BusinessDay’s Frank Eleanya in this interview, on the strides the company has made in pushing payment technology across the continent. She also speaks about plans for more collaboration with industry players in Nigeria and other markets in other to provide access to financial services to millions of unbanked people on the continent.
Mastercard recently sponsored a report by The Economist Research Unit on the state of the fintech sector in Nigeria. What informed this sponsorship?
Over the last few years, fintechs have drastically disrupted the financial services sector, contributing to the rapid digital transformation of products and services that are making lives more convenient, simpler and rewarding.
Mastercard has long recognized the significant value fintechs add to both consumers and businesses. We have been actively engaging with them to strengthen the digital payments landscape and bring together an ecosystem of key players at different touchpoints. But other key stakeholders also play a critical role, such as telcos, e-tailers, and banks. And when we bring them all together, we can empower millions of people across Nigeria by delivering innovative digital solutions that have a far-reaching impact, and unlock the true potential of inclusive growth.
Mastercard’s partnership with the Economist Intelligence Unit is underpinned by this vision, as we continue to build the domestic payment landscape in Nigeria. Through collaboration, and connecting partners to each other through digital solutions and technology, we can make a real difference and completely transform people’s lives for the better.
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One of the questions raised at the report launch was whether fintechs have truly moved the needle on financial inclusion. Some experts believe that it is easing financial transactions only for those already in the formal financial system. What is your take on this?
Fintechs have made huge inroads in enabling financial inclusion all over the globe, particularly in Africa.
The World Bank found that financial inclusion across the continent almost doubled from 23 percent to 43 percent between 2011 and 2017. Fintechs have an important part to play in contributing to the adoption of digital technologies. In rural communities, this has brought people and businesses into the formal economy, creating more opportunities, and improving livelihoods.
Mobile Money in particular has accelerated financial inclusion and transformed the payments landscape. According to GSMA, Sub-Saharan Africa has more mobile money accounts than anywhere else in the world, with approximately 396 million at the end of 2018, or 46 percent of all customers.
At Mastercard, not only have we have witnessed this remarkable growth first hand, but we have also played a proactive role in driving the adoption of mobile money to unlock value for millions of consumers and businesses. Last year, for example, we announced a digital partnership with Airtel Africa, enabling access for over 100 million mobile phone users to virtual card numbers and QR payments in 13 markets across the Middle East and Africa.
Given the crucial role that fintechs play in driving financial inclusion, what is Mastercard doing to support fintech growth in Nigeria?
Globally, we launched Mastercard Accelerate, an initiative that simplifies the way Mastercard works with fintechs, giving them access to everything they need to grow quickly. Offering a simple, single entry-point to our company’s wide portfolio of specialized programs, Mastercard Accelerate gives start-ups and emerging brands support and assistance for every stage of their growth and transformation, from market entry to global expansion.
Accelerate comprises a range of award-winning programs that have helped participants all over the world, including Nigeria, by offering access and benefits from Mastercard’s ecosystem, customers and innovations.
One of our key programs in Nigeria is Mastercard Engage – an initiative launched last year in Lagos and Nairobi that connects fintechs to thousands of Mastercard technology partners, making it quick and easier for them to work together. Mastercard continuously selects dynamic entrepreneurs to join its award-winning startup engagement program Start Path, with the most recent African fintech to join being Hello Tractor, which allows farmers to access affordable tractor services, plant on time, and increase yields.
Nigeria has defined a target of 95 percent financial inclusion rate by 2024. However, a 2018 data by EFInA put Nigeria’s financial inclusion rate at 63.2 percent, meaning that as much 36.8 percent or about 40 million adults still lack access. Is this target achievable and what can be done to fast track the achievement of this target?
There’s no doubt that this is an ambitious target, but I firmly believe that it can be achieved. The growth of digital technology and the proliferation of mobile devices have presented people in Nigeria with unprecedented opportunities; from innovative, affordable solutions that help them meet their basic needs, to greater access to capital that can scale businesses and increase prosperity. A collective approach that harnesses the power of partnerships is key to achieving this goal and reach millions of people that are still locked out of mainstream economies.
This collaboration is at the core of our vision to create a digital economy in Africa that works for everyone, everywhere. Everyone has a role to play, from the smallest businesses to the biggest corporations, governments to NGOs, traditional banks to fintechs, from the older generations to the youth. The key to gathering pace is to continue digitization and expanding acceptance to support use. To do this, we must understand user needs and behavior through research, in-market assessment, and cash journey mapping.
Financial education is also very important, along with employing authentication technologies that respect user privacy. We must co-create with governments and enable innovation through close engagement with regulators, and run pilots to ensure commercial viability, while remaining focused on achieving scale.
Mastercard continues to be the single technology provider of choice that connects telcos, digital e-tailers and fintechs to their consumers by providing technology solutions, platforms and propositions that enable a superior digital experience and drive greater inclusion for people across Nigeria and the wider continent.
Mastercard’s white paper indicates that close to 95 percent of consumer payment transactions in Nigeria are still done by cash; how can governments overcome the heavy reliance on cash and ensure increased adoption of digital financial technologies?
Digitalization is our ultimate tool for building a world beyond cash, while technology and innovation are key enablers for helping governments to overcome the burden of cash. By ingraining digital processes in key sectors, we will encourage everyone to participate.
To make digital financial services appealing to the excluded, our solutions need to mimic cash in their ease of use, while also being readily accessible, secure, and used everywhere. In other words – we need ubiquity, interoperability and scale.
We are doing this by building solutions that are domestically relevant and drive greater inclusion so everyone can benefit from a thriving domestic ecosystem beyond cash. An example of this is Jaza Duka, which connects micro-merchants to micro-credit opportunities. In the Middle East and Africa alone, we’ve already reached over 100 million consumers and 1.5 million merchants with our QR payments technology.
In our white paper “Cashing Out: Economic Growth through Payment Digitization”, Mastercard’s Global Cash Reduction Framework breaks down cash’s root causes into three components: Instrumental, Infrastructural, and Institutional. This is ultimately how we can address the heavy reliance on cash in favor of digital finance to grow financial inclusion – and Mastercard has made a global commitment to bring 1 billion people and 50 million small businesses into the digital economy by 2025.
Cash can only be displaced to an appropriate degree if there is an established acceptance infrastructure that is sufficiently trusted and offers compelling electronic payment value propositions for consumers and businesses. Governments, of course, will be critical in helping economies overcome their heavy reliance on cash. They have a strategic role to play in policy formation and creating the right enabling environment and business climate for digital payments to flourish.
Many experts say that there is no business case for implementing financial inclusion initiatives for the last mile, what is your take on this and what can be done to bring vulnerable populations into the formal financial system?
Nigeria’s greatest opportunity lies in its ability to develop inclusively. Success is lifting people out of poverty and building a more prosperous middle class that benefits everyone – people, governments, and businesses alike.
The pandemic has brought stark contrast to the reality of the digital divide. The fight against it has made it apparent how interconnected our world is. Our well-being is intertwined with that of others. This crisis has underscored just how important it is for individuals and small businesses to be connected to the digital economy.
As a trusted partner that has developed its secure, resilient, and reliable network over many years, Mastercard is in a unique position to lead a response that offers value to consumers, businesses, merchants, financial institutions, and governments. In fact, our commitment to our customers, partners and employees, has never been stronger.
We are helping businesses and merchants to prepare for stabilization, normalization and eventual growth by enabling commerce. We are doing this in so many different way – from partnering with Omaness to offer women a sustainable income as skinfood merchants, to growing fintech companies like Hello Tractor, which is positively changing the landscape for farmers.
Which of the payment channels, USSD, and mobile money do you see as a more viable option for driving pervasive financial inclusion?
I would say that the focus shouldn’t be on anyone channel, but on making it easier to accept electronic payments across the board, along with greater access to other opportunities, including credit.
Bridging the digital divide is essential to enabling financial inclusion. For all countries and communities to benefit from future growth and opportunities, we must ensure everyone is included through easier access to digital financial services.
What is the impact of the pandemic and lockdown on card payment in Nigeria?
COVID-19 is challenging the way we live, work, and interact with one another. This global crisis has exposed how ‘illiquid’ cash is and the power of digital payments in continuing to enable retail and commercial transactions.
Trends that are impacting payments ecosystem players include the surge in touchless experiences, contactless transactions, and digital payments amidst social distancing recommendations.
This is also necessitating a renewed drive for the inclusion of the unbanked who aren’t digitally connected.
Furthermore, SMEs must go digital to ensure consistent revenue streams while facing cash flow challenges and increased cybersecurity risk. With travel restrictions in place, there is also an increased need to move remittances to digital banking channels. Mastercard remains committed to helping our clients weather this crisis, prepare themselves for a strong recovery, and sustain them post-pandemic.
What is Mastercard doing in making the payment infrastructure in Nigeria more efficient and reliable?
Nigeria is rapidly transforming and is well-positioned for a journey of significant growth and opportunity. To advance digital financial inclusion, Mastercard is actively engaged to build the country’s domestic payment landscape, connecting key players through digital solutions, while extending acceptance infrastructure.
Our technology enables our digital partners to take control of their consumers’ digital commerce needs, interactions, and experiences. By focusing on the provision of multi-use, omnichannel digital payment solutions, Mastercard is enabling its partners to improve their operational efficiency, diversify their revenues, and transition seamlessly into digital commerce.
We strongly believe that digitization has the greatest potential to overcome infrastructure barriers to accelerate financial inclusion and drive economic growth across multiple sectors of the economy. This will help formalize the informal economy, and boost business growth and productivity.
Our objective to harness technology to realize the true potential of inclusive growth may seem an impossible task in a continent where millions of people are locked out of mainstream economies. It is not. Through thoughtful innovation, we are confident that we can make it a reality.
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