Regulatory Flexibility Is Key Factor of Success in the African Mobile Payments Sector, Pyramid Research Finds

Jan 27, 2009

Regulatory flexibility is a key factor of success for the African mobile payments sector due to the fact that service providers need active central-bank support and flexibility, according to a new report from Pyramid Research (, the telecom research arm of the Light Reading Communications Network (

"Mobile Financial Services in Africa: The Business Case for Operators and Banks" reviews and analyzes mobile financial services offerings in African markets, looks at drivers and obstacles to mobile financial services, breaks down business models to assess their true bottom-line impact, and provides market projections based on intrinsic market dynamics. The report includes analysis and forecasts for the three primary segments within mobile finance -- namely, payments, transfers, and banking services.

Click here for more information and to download an excerpt: PIA

Historically, mobile financial services in Africa have been driven by banks providing additional services and convenience to their client base, which tend to be urban and with a certain income level. This leaves a significant opportunity to provide financial services to the "unbanked" across the continent, which typically make up between 75 percent and 95 percent of the population, and mobile operators have the infrastructure and distribution networks to reach such segments efficiently.

"Regulation and compliance are arguably the tallest hurdles a provider of mobile payment services faces," comments Jan Ten Sythoff, Manager of EMEA Research at Pyramid and co-author of the report. "Mobile banking services have to meet requirements such as 'know your customer' (KYC), security, and cash management that are critical to financial industry regulation."

The report determined that regulatory frameworks are still in flux. With regulators themselves still coming to grips with the inner workings and overall implications of mobile financial services, "Mobile Financial Services in Africa" found the legalization process is bureaucratic and cumbersome.

"Laws governing financial services are extensive, complex, and require substantial compliance resources," notes Sythoff. "They are also typically built for pure financial institutions, making them difficult for non-banks to implement without becoming full-fledged banks themselves."

The report discovered other practical challenges that complicate the implementation of mobile financial services in the African context, including fulfillment, security challenges, and distribution.

An important conclusion of the report is that, although there is a revenue upside for offering such services, it is primarily other benefits for network operators that make such services attractive, particularly churn reduction and subscriber acquisition. The report includes a number of case studies to demonstrate its findings, including that of Safaricom's success with its MPESA service.

"Mobile Financial Services in Africa" is part of Pyramid's research report series. A blend of primary research and qualitative analysis, Pyramid's research reports offer comprehensive coverage of the fixed and mobile communications space and enable those in the communications industry to stay ahead of changing market dynamics.

This Report is now available for purchase. To purchase, contact Dave Williams at, or click here: PIA.

About Pyramid Research

Pyramid Research ( offers actionable solutions to the complex demands our clients face in the telecommunications, media and technology industries. Our analysis is uniquely positioned at the intersection of emerging markets, emerging technologies and emerging business models, powered by the bottom-up methodology of our market forecasts for over 100 countries -- a distinction that has remained unmatched for over 20 years. As the telecom research arm of the Light Reading Communications Network, Pyramid Research works with Heavy Reading, providing the communications industry's most comprehensive market data, trusted research and insightful technology analysis.

About Light Reading

Founded in 2000, Light Reading ( is the leading online media, research, and focused event company serving the $3 trillion worldwide communications market. is the ultimate source for technology and financial analysis of the communications industry, leading the media sector in terms of traffic, content, and reputation. Light Reading's research arms, Heavy Reading and Pyramid Research, provide the most comprehensive communications research, market data, and technology analysis in close to 100 markets around the world. Light Reading produces nearly 20 targeted communications events including TelcoTV, Ethernet Expo New York and Ethernet Expo London, The Tower Summit @ CTIA, and Optical Expo, as well as focused one-day events tailored for cable, mobile, and wireline executives. Light Reading was acquired by United Business Media in August 2005 and operates as a unit of TechWeb.

About TechWeb

TechWeb (, the global leader in business technology media, is an innovative business focused on serving the needs of technology decision-makers and marketers worldwide. TechWeb produces the most respected and consumed media brands in the business technology market. Today, more than 13.3 million* business technology professionals actively engage in our communities created around our global face-to-face events, Interop, Web 2.0, Black Hat, and VoiceCon; online resources such as the TechWeb Network, Light Reading, Intelligent Enterprise,,, and The Financial Technology Network; and the market leading, award-winning InformationWeek, TechNet Magazine, MSDN Magazine, and Wall Street & Technology magazines. TechWeb also provides end-to-end services including next-generation performance marketing, integrated media, research, and analyst services. TechWeb is a division of United Business Media, a global provider of news distribution and specialist information services with a market capitalization of more than $2.5 billion.

*13.3 million business decision-makers: based on number of monthly connections

About United Business Media Limited (

United Business Media Limited (UBM) is a global media and marketing services company that informs markets and brings the world's buyers and sellers together at events, online, in print, and with the information they need to do business successfully. UBM serves professional and commercial communities, from IT professionals to doctors, from journalists to jewelry dealers, from farmers to pharmacists around the world. UBM employs more than 6,500 people in more than 30 countries. UBM's businesses operating in the US include CMPMedica, Commonwealth Business Media, Everything Channel, PR Newswire, RISI, TechInsights, TechWeb and Think Services. UBM is listed on the London Stock Exchange (UBM.L) and has a market capitalization of $2.5 billion.

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SOURCE: Pyramid Research

CONTACT: Jennifer Baker of Pyramid Research, +1-617-871-1910,

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