Global Markets

MTN and Ecobank form task teams for targeted African expansion

MTN and Ecobank are forming task teams to identify the most appropriate financial services products for each of the 13 African markets they plan to target jointly.


MTN signed an agreement with the Nedbank associate company in early April aimed at developing new financial services products for the countries in which their operations overlap, bar SA and Ethiopia.


They will target Benin, Cameroon, Congo, Ghana, Guinea-Bissau, Guinea, Ivory Coast, Liberia, Nigeria, Rwanda, South Sudan, Uganda and Zambia. MTN said it was launching working groups “across the markets to draw up our implementation plan and probable product road map”.


While the products would differ across markets, the mobile operator and Togo-based bank would initially consider mobile bank accounts, transfers between Ecobank accounts and MTN mobile wallets, and international remittance services. The companies have also said they would consider mobile saving and lending products and digital payment services.


Marketing strategy

Products would be marketed to customers via apps and SMSes, among other channels, MTN said.


“We are … taking this opportunity to jointly innovate new products and services that will revolutionise access to financial services,” the company said.


Meanwhile, regulators in many markets in which the companies operate are tightening up on mobile financial services. Fitch’s BMI Research has said in a note that African governments are increasingly aiming to tax mobile financial services transactions, which could curb the industry’s growth.


In April, the Ugandan government proposed a 1% tax on all mobile money transactions, while earlier in 2018, Ivory Coast imposed a 0.5% tax on mobile money transfers, BMI said. Similar levies were in force in Kenya, Tanzania and Zimbabwe, and had been proposed in Ghana and the Democratic Republic of the Congo.


“Given the high-volume, low-value nature of mobile financial services, we believe implementing a tax on all transactions, regardless of volume or use, would be detrimental to the uptake of mobile financial services and limit the development of more advanced services,” the research house said.


Governments should rather tax the service providers’ revenues or transactions that exceeded certain value thresholds, BMI said.


“They would still accomplish the government fundraising objectives without risking the abandonment of mobile money.” BMI said in a separate report that Vodacom and MTN might be interested in investing in Zimbabwe’s telecommunications market, which was opening up to the private sector.


Since they were already present in neighbouring countries, Viettel, Vodacom and MTN were seen as “potential investors” in Zimbabwe’s mobile operators.


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