Huawei, Kunlun and China’s tech giants drive a quiet revolution in Africa’s fintech with mobile payment apps and wallets
- One of Africa’s biggest mobile wallets is M-Pesa, established in 2007 by the Kenyan phone company Safaricom, using Huawei’s enterprise solution
- Zhou Yahui of Beijing Kunlun Technology is behind the Nigerian e-commerce and payment company OPay
A digital revolution is quietly under way in Africa, as dozens of electronic wallets have sprouted on the continent for users to transfer money digitally through their smartphones, some of them powered by Chinese technology.
“Mobile phone companies like Safaricom stepped in to fill the void” left by the large African banks – mostly counting Western shareholders – who do not want to have anything to do with the average person in the street, preferring the genteel, secure world of corporate banking, “and now they are eating the banks’ lunches,” said Peter Wanyonyi, a Kenyan technology analyst based in Waikato, New Zealand.
Huawei, based in the southern Chinese technopolis of Shenzhen, dubbed China’s Silicon Valley, is not the only company to be building mobile wallets in Africa.
OPay, founded in 2018, counts Softbank, Sequoia Capital, Meituan and Bertelsmann Asia Investments as among its Series-B investors, in a recent US$400 million fundraising that values the company at US$1.5 billion, according to data compiled by Crunchbase.
The microlending market has also attracted Silicon Valley-based tech investors such as Tala and Branch. But there are additionally hundreds of locally and foreign-funded fintech companies targeting African customers who are unserved by traditional banks.
Like the prepaid SIM cards that popularised cellular telecommunications for millions of Africans who cannot afford costly monthly accounts, mobile payment wallets make payments and e-banking available to wide swathes of the population. There is even a simpler version that works on 2G telecommunications networks instead of smartphones.
“It means one can send remittances or have access to banking options from a feature phone via text messages, instead of a smartphone,” said Henry Tugendhat, a senior policy analyst at the US Institute of Peace. “There are still large swathes of rural Africa with 2G telecoms infrastructure, where the poorest may have feature phones, but not smartphones.” “This is different from WeChat’s payment service or Apple Pay because those only function over the mobile internet,” which requires 3G infrastructure or above, he said.
Huawei’s mobile wallet partners in Africa Vodafone, Vodacom and Teasy Mobile are available in 19 countries including Kenya, Ghana, Lesotho, Nigeria, Tanzania, Zimbabwe and the Democratic Republic of Congo.
He said mobile money has proved to be an excellent solution in bringing large segments of the lower-income population into the formal banking environment, with the possibility of offering a range of products to them, such as insurance, loans and funeral cover.
This is similar to what prepaid mobile services did for closing the telecoms divide. Pater said this presents a very good investment and growth opportunity, not seen on this scale in other global regions with more developed financial sectors.