Zain and MTN target South Sudan as next mobile-money frontier
JOHANNESBURG, July 19
JOHANNESBURG, July 19 (Reuters) - Telecoms operators MTN and Zain have targeted South Sudan, the world's youngest nation, as the next untapped market for mobile money, with both groups planning to launch services that will turn cellphones into virtual bank accounts.
For every adult in the country, which marked its first year of independence this month, there are fewer than 0.01 bank accounts, compared with 0.3 for Africa as a whole and 1.6 for western Europe.
That means everything has to paid for in cash, and in a nation the size of France, with barely 100km of paved roads, sending money can be costly and dangerous.
Zain and MTN, which compete with Vivacell, Gemtel and Sudani in South Sudan, say that mobile money will make payments easier and more transparent, provide rural communities with access to financial services and could transform the economy, as Safaricom's M-Pesa service has in Kenya.
The two companies said that they intend to take on partner banks in their ventures but did not name any possible contenders.
Only 13 percent of South Sudan's eight million people own a mobile phone, but Zain predicts that this will grow to 36 percent by 2016. It also forecast that it will have 3.2 million mobile-money subscribers by 2016, with transactions totalling $1.03 billion.
"There's pent-up demand for it, particularly in the NGO sector, government and business," said Hakeem Dario N'Moi, chief executive of Zain South Sudan.
"They want to be able to pay their staff and transact in a more efficient way. It would certainly bring some advantages over taking money by road."
Zain has 39 percent of the South Sudan mobile market, compared with about 28 percent for MTN. N'Moi said that Zain aims to launch its mobile-money service by the end of this year, mainly as a way of boosting market share to 50 percent.
MTN's chief commercial officer, Christian de Faria, said that its mobile-money offering should also be up and running this year.
Both operators, which have introduced mobile-money services in other African countries, say that they want to emulate the success of M-Pesa. Launched in 2007, the service now accounts for more than three quarters of all mobile-money transactions in Kenya.
The World Bank estimates that transactions through M-Pesa and similar services equate to 20 percent of Kenya's GDP.
South Sudan, however, will prove a more difficult proposition because of its small population and the near economic collapse since the shutdown of oil production after a dispute with the north over transit fees.
"The path to profitability is through volume of transactions," mobile-banking consultant Loretta Michaels said. "The smaller a country is, the harder it is for any one carrier to get the kind of volume it needs."
(Editing by David Goodmann)
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