bigtechs, interoperability,...

BigTechs, interoperability, e-commerce:

Part of the Orange group

challenges and opportunities of digital financial services

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Challenges and opportunities of digital financial services

About Sofrecom

Sofrecom, an Orange subsidiary, has developed over 50 years a unique know-how about operator businesses, making it a world leading specialist in telecommunications consultancy and engineering.

Its experience of mature and emerging markets, combined with its deep understanding of the structuring changes affecting the telecoms market make it a valued partner for operators, governments and international investors.

In recent years, over 200 major players in over 100 countries have entrusted strategic and operational projects to Sofrecom: transformation and optimization, technological modernization, innovation and development.

Sofrecom assists its customers’ digital transformation, boosting their operational performance and service differentiation, thanks to a highly innovative approach to customer experience, very high broadband, mobile financial services, e-government, change management…

Sofrecom’s strength lies partly in its diversity, with more than 1,700 consultants and experts of 30 nationalities working in 11 agencies around the world.

Sofrecom is above all a network of men and women, a powerful network of knowhow and expertise which ties its personnel to customers, Orange experts and industrial and local partners.

Sofrecom’s Know-How Network is also the guarantee of a transfer of know-how, skills and expertise for sustainable transformation based on internationally certified methodologies.

For more information, please visit our website : www.sofrecom.com

Sofrecom, The Know-How Network

P.4 GAFA and BATX extend their foothold in financial services

P.6 Traditional mobile money assets weakened by new models

P.9 The agent networks central to the differentiation strategies of digital financial service providers

P.11 Mowali tackling payment interoperability in Africa

P.14 Mobile payment, the main growth lever for e-commerce in Africa

P.16 Mobile money supporting the farming of the future

P.18 Conclusion

Summary

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Introduction

T he digital financial services market has been shaken up in recent years by new players such as Apple, Facebook and Alibaba. The dazzling success of services like Alipay and WeChat Pay reflects consumer and corporate interest in new online payment

services and marketplaces that are seamlessly integrated into communication tools and services. Today, BigTechs such as these

are focusing their expansion plans on Africa.

This new competition is putting pressure on the design and marketing models of telecommunications operators, the principal providers of digital financial services in Africa. Having long enjoyed almost exclusive competitive advantages, they must now rethink and evolve their positioning to reflect this new market reality.

One of these advantages is the distribution network. Although it is by no means unique, it is an asset that operators should treasure. What they need to do now is recreate value at contact points across the network to turn them into growth levers.

Driven by strong consumer demand, interoperable digital financial services are fast becoming a reality. They are opening up new growth opportunities across the board,and will extend ecosystems and spur the creation of new services such as contactless and online payment.

E-commerce, which is really taking off in Africa, is also relying heavily on digital financial services to support its expansion. These needs open up real service development opportunities for all the sector players.

So, to stay ahead of the curve despite the profound changes brought about by new forms of competition like OTT (Over The Top) services, telecommunications operators must rethink their value proposition and their operating model.

At Sofrecom, our experts help you design and implement your strategies to achieve these objectives effectively. The purpose of this report is to analyse the digital financial services market and explore the new challenges that telecommunications operators must overcome to maintain their influence in the sector. Our aim is to continue supporting you and guiding your choices so that you achieve your business and human goals.

Rambert NamyHead of Business Consulting,

Sofrecom

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GAFA and BATX extend their foothold in financial servicesVincent Weber - Mobile financial services management consultant

GAFA1 and BATX2 have been engaged in the financial services sector for several years now. While their strategies and models vary according to the location, they have transformed the sector in under five years. These perpetually successful digital economy players now enjoy a prominent market position in financial services, and are continuing to innovate.

Developed countries: from mobile payment to corporate financing

In recent years, GAFA have really scaled up their initiatives in the US and European financial services markets. Initially, their approach consisted mainly in providing new digital payment solutions. In 2013, Amazon introduced Amazon Pay to enable its customers to pay online. In the following year, Apple launched Apple Pay, a smartphone payment app based on contactless NFC (Near-Field Communication) technology. As for Google, in 2018 it brought all its payment services (including its mobile payment, electronic wallet and mobile money services) under the umbrella of Google Pay. The approach is often the same, regardless of the company: simplify the customer experience as far as possible, and integrate payment into the digital giants’ applications ecosystem.

New financial services have subsequently been launched, very often through partnerships with major banking operators. Thus, Amazon has been providing loans to merchants since 2014. The e-commerce giant also plans to partner with major players like JP Morgan in the United States to provide health insurance for employees. In March 2018, Apple announced the release of Apple Card in the United States, backed by Goldman Sachs and Mastercard.

These companies have different strategic interests. By natively integrating payment functions into its telephones, Apple is trying to enhance their value proposition and make them an indispensable part

of users’ everyday lives. As for Google, access to payment transactions gives it more data to monetise. The discovery of its secret alliance with Mastercard in September 2018 shows just how important data is to the Google corporation. Thanks to this partnership, Google is able to match online advertising with the offline purchasing habits of consumers. Emerging countries: specific approaches tailored to local needs

But GAFA’s playing field is no longer limited to developed countries. They have taken several initiatives that reflect their commitment to expand into emerging countries. In India, there are already more than 20 million Google Pay users. While it initially concentrated on payment services, Google is now seeking to monetise its user base and has already launched a range of instant loans in partnership with four leading Indian banks – HDFC Bank, ICICI, Kotak Mahindra and Federal Bank.

Facebook is also asserting its position as an OTT (Over The Top) financial services provider, by developing its first pilot projects and partnerships with African banks. Marc Zuckerberg himself promoted the chatbot, a new virtual assistant that helps customers use payment services and manage their banking directly from Facebook Messenger.

Thus, United Bank of Africa, Diamond Bank and Guaranty Trust Bank in Nigeria have taken the

1 Refers to America's Internet giants: Google, Apple, Facebook and Amazon.2 Refers to China's Internet giants: Baidu, Alibaba, Tencent and Xiaomi.

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plunge: they have agreed to be “disintermediated” and allow Facebook to liaise directly with their customers on their behalf.

In this model, the bank provides the banking service and Facebook distributes it. Facebook has made no secret of its ambitions to replicate this model in other African countries and Asia. China's Internet giants, BATX, are certainly not lagging behind with their aggressive expansion strategies in the financial services sector

In this race to diversify financial services, China's Internet giants are also performing extremely well. Their financial services platforms are a colossal commercial success in China, and are quickly becoming popular abroad.

At the start of 2019, the Alipay service developed by e-commerce giant Alibaba had over one billion active users worldwide, and more than 40 million retailers in China accept Alipay payments via a QR (Quick Response) code. The same applies to WeChat Pay, which has capitalised on the user base of its instant messaging system.

Alipay's parent company, Ant Financial, is developing numerous international partnerships to increase acceptance of Alipay and enable Chinese tourists to use it in different countries.

At the same time, since 2015, it has been buying or investing in various local players such as Paytm in India, Ascend Money in Thailand, Mynt in the Philippines and Telenor Microfinance Bank in Pakistan. In 2017, it even made an unsuccessful attempt to buy American company MoneyGram. This would have given it access to the African market.

Some mobile money operators, like the pioneering M-Pesa, have anticipated the arrival of these players and are preparing to fight back. For example, Safaricom’s innovation laboratory has launched two initiatives based on different business models:

• The first, Masoko, was launched in 2017 and is an e-commerce platform that connects Safaricom merchants and customers. The operator has copied the formula of global players like Amazon and Alipay.

• The second, Bonga, is an instant messaging

application that allows users to chat, transfer money or buy goods online from independent retailers. It natively integrates with the M-Pesa payment platform and seems to draw extensively on the methods that have made WeChat Pay a success.

Both GAFA and BATX have now made it very clear that they mean to expand their activities and sales in the financial services sector, especially in developing countries. In Africa, mobile money operators will definitely have to update their models to withstand this new competition.

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Innovative technologies, changes in market conditions and new regulations have significantly weakened these barriers.

Mobile internet usage is generally low in the prime mobile money markets. In most markets, the majority of mobile money transactions are still made via USSD (see insert).

Historically, mobile telephone operators have enjoyed monopolistic access to USSD. They can grant user rights to third parties while retaining full control and, in general, setting access prices.

Furthermore, any company that wishes to provide its customers with a USSD application must establish partnerships with every telecommunications operator so that it can be used on any mobile network.

This monopoly is now threatened. In Kenya, Equity Bank was licensed as an MVNO (Mobile Virtual Network Operator) in 2014. Thanks to this MVNO, which operates under the name Equitel, the bank has its own USSD channel.

In April 2018, Senegal's telecommunications and postal regulator (l’Autorité de Régulation des Télécommunications et des Postes) liberalised access to USSD codes, thus providing value-added service providers with agnostic (multi-operator) access to the USSD channel.

Will USSD soon be replaced by mobile applications?

The main threat to USSD usage is the widespread adoption of mobile internet services and smartphones. The GSMA predicts that smartphones will account for two out of three mobile connections in Sub-Saharan Africa by 2025, and that mobile broadband will account for nearly 90% of these connections1.

This would probably lead to users abandoning USSD in favour of mobile applications that offer a better user experience and a wider range of

What is USSD?

USSD (Unstructured Supplementary Service Data) is a mobile telecommunications protocol for sending and receiving data.

It works with even the simplest of mobile phones (99% of telephones are compatible). All users have to do is enter a code (such as #000#) to access a list of textual options and therefore services.

Because operators have exclusive access to USSD, they have always been on the front line of developing mobile money usage.

Traditional mobile money assets weakened by new modelsSylvain Morlière - Senior mobile financial services management consultant, Sofrecom

Telecommunications operators have built the success of mobile money on a set of differentiating assets. For a long time, they enjoyed exclusive access to these resources. Other players could neither replicate nor buy them, which effectively shut them out of the mobile money market or considerably reduced their chances of success. Such assets included agent networks and USSD interfaces,

which were robust barriers to entry.

1 GSMA, The Mobile Economy Sub-Saharan Africa 2018.

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The main assets of mobile money operators

functionalities. In China, for example, where mobile internet usage has spread fast, the majority of payments are made via mobile applications.

Thanks to QR (Quick Response) code technology, these have increased merchant payment usage. In Sub-Saharan Africa, some innovative players are now offering mobile financial services only. An example is the mobile payment service, Wallet, in Nigeria. Agent banking: when banks imitate the mobile money distribution model

The agent network is a key asset in the mobile money operating model. Some analysts would even argue that it is the main “brick” in the model, as it plays a critical role in deposit and withdrawal transactions.

In addition, it gives mobile money services a decisive competitive advantage: the physical proximity of the agents, their flexible hours and the short waiting time at service points make them far more attractive than traditional financial services.

Now, although agent networks have generally been considered hard to replicate, some players besides telecommunications operators have succeeded in setting them up. Thus, banks in several countries have created their own networks of independent agents.

Under this model, which is known as agent banking, Cooperative Bank deployed over 11,000 agents in Kenya in early 2017. At the same time, Equity Bank said it deployed more than 25,000. In West Africa, Société Générale plans to hire 8,000 agents by 2020 to support the development of its mobile money service Yup. Mobile internet usage, a gateway for new players

Telecommunications operators have drawn on their large customer bases to develop the usage and take-up of mobile money services. They have recruited most of their users from their mobile customer base, taking advantage of huge “fleet effects”.Their direct access to these customer bases

Differentiatingnature

Customer data

Know-how /Marketing

budget

Customer base

IT platform

core

IT functional modules

Agent network

Licence (or partner)

Digital channels

/USSD

Reach

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has given them a considerable advantage over other financial service providers.

Nonetheless, other digital players now have substantial user bases in countries where mobile money is flourishing. For example, Facebook has over 4 million users in Ivory Coast, over 5 million users in Ghana and nearly 20 million users in Nigeria1.

At the same time, customer data is no longer the sole preserve of operators. In the past, they had exclusive access to large user data repositories.The

rise in internet usage has enabled other players to collect large volumes of such data.

Social media platforms will probably know exactly how to make the most of the opportunity. But other players, such as Tala in Kenya, will also be able to access large amounts of data stored in users’ mobile phones or saved from their browsing history.

This may be a major source of inspiration for mobile money operators as they work on updating their models, as well as an opportunity to develop strategic partnerships.

1 We are social, Digital in 2018 in West Africa.

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Agents collect deposits and convert notes and coins into electronic money, and are therefore the primary supply channel for mobile money ecosystems. They are also the main physical points of contact for users: as such, they play a crucial role in customer recruitment, support and advice.

Furthermore, agents are a key component of the value proposition of mobile money. The local service they provide delivers a powerful competitive advantage over traditional financial institutions: no expensive and time-consuming journeys for users, extended hours of business, and considerably shorter waiting times than in banks. How can the service quality of agent networks be improved?

The quality of a mobile money agent network relies on a now familiar set of fundamental factors: extensive territorial coverage, a comprehensive network adapted to the potential of individual areas, availability of e-money and cash, initial and further training for agents, implementation of network management tools, and an attractive commission scheme.

New management tools have been developed to boost the performance of agent networks and, ultimately, increase the value created for users. These tools are based on extensive analytical capabilities. They can be used, for example, to

optimise agent recruitment and hence prioritise high-potential areas. Agents will be therefore be placed in money transfer corridors, based on criteria related to the specific socio-economic characteristics of the country concerned (rural/urban areas, primary/secondary sector, etc.). The most advanced management tools can also be used to support sales operations and generate action plans. Based on the analysis of performance indicators and directly “pushed” on sales teams,

The agent networks central to the differentiation strategies of digital financial service providersJulien Guyotte - Senior mobile financial services consultant, Sofrecom

According to the GSMA, there were nearly three million mobile money agents operating worldwide at the end of 2017. These agents play a key role in the operation of mobile payment services. Formerly the preserve of telecommunications operators, independent agent networks are now also being set up by their competitors. Given the growing competition in the digital financial services market, differentiation will come in two forms: value creation by the

distribution network and value creation for the agents themselves.

Agent networks no longer the sole preserve of telecommunications operators

Some “over-the-counter” (OTC) money transfer operators have set up their own independent agent networks.

In Senegal, Wari has dominated the do-mestic money transfer market for several years. The simplicity of Wari's offering, its affordable prices and - above all - its incre-dibly extensive sales network hindered the development of local challengers for a long time. Not to be outdone, banks are adop-ting banking agent models: Equity Bank in Kenya and the Société Générale group in French-speaking Africa are deploying or planning to deploy independent agent networks on a large scale.

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they explain in detail the actions to take on the ground.

The management of cash and e-money reserves is a major area for improvement. Sofrecom has observed that depositing and withdrawing large sums of money is still a challenge in several countries, especially in rural areas. Some tools can predict demand or anticipate stock shortages by analysing usage trends and external data. Mobile money operators who can guarantee that their agents have a ready supply of cash or e-money will have a decisive competitive advantage.

Agent training and information are still key to network performance and user satisfaction, given that agents are on the front line of user contact. The majority of mobile money operators are only just starting to explore the new forms of interaction enabled by technology in this area. Interactive media especially can provide more effective training. Therefore, some operators are experimenting with video tutorials, social media, chatbots and voicebots (interactive vocal servers) to inform, train and assess their agents.

Agent recruitment and retention strategy is likely to play an increasingly important role given the growing number of digital financial services being launched. The Helix Institute estimates that, in 2015, around two thirds of digital financial services agents in Tanzania, Uganda and Senegal were working with more than one provider (the median value was three).

To attract agents and secure their loyalty, digital financial services providers must develop a convincing value proposition. This will necessarily require effective support for agents. The replenishment of cash and e-money reserves, for example, is one of their main concerns (insufficient reserves may result in unnecessary travel, the temporary closure of sales outlets and therefore a loss of earnings). Some providers have engaged

in major discussions on this issue, and companies like Airtel Uganda1 have set up mobile teams to replenish the network. Operators are also exploring so-called “multi-CU” (currency unit) models, which may be offered to agents who sell both mobile money services and prepaid telephone credit. Under these models, agents no longer have to “stock” both e-money and telephone credit: they have a single e-money account, and the e-money is instantly converted to telephone credit when prepaid airtime is sold.

Besides straightforward loyalty programmes, a high value-added service package will also be needed to ensure agent loyalty. The provision of credit on preferential terms will no doubt be a powerful tool. In fact, working capital requirements are often a hindrance to agents (who tend to run a parallel business). Mobile money operators are able to grant credit based on a precisely documented level of risk, which is calculated using agent activity data. Examples of such arrangements include the loans offered to business owners by Kopo Kopo in East Africa, Equity Bank in Kenya, and Airtel Money - in partnership with Jumo - in Uganda. Coupled with other value-added services (inventory, order, invoice management), these solutions will be effective retention levers, encouraging agents to conduct their financial transactions through a single service.

Compensation is still a key factor in agent motivation. In addition to an attractive commission scheme, digital financial service providers may explore opportunities to generate additional earnings for their agents. Thus, the skills and tools used in the distribution of mobile money services could be extensively monetised: customer registration on behalf of non-competitor third-party players, parcel collection points for distance selling services, etc.

1 Distribution 2.0: The future of mobile money agent distribution networks, GSMA 2018.

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Mowali tackling payment interoperability in Africa

What is the reasoning behind the Mowali project?

We have been talking about interoperability for a long time now. The whole sector agreed on its utility very early on. In fact, a few years ago, the GSMA set up an interoperability working group involving the main mobile money service operators, including MTN Group and Orange. The operators agreed to work together to accelerate the implementation of interoperable mobile money services across Africa and the Middle East.

Thanks to, or because of the exponential growth in mobile money services and users in the past few years, the limitations in terms of usage have become more apparent. The current “closed loop” model no longer meets the demands of users, who want to send money to more people and pay for a wider variety of services through their own mobile network or another.

So, MTN Group and Orange decided to take proactive action, using the GSMA's work as a springboard to launch an innovative new service as quickly as possible. There was no longer any doubt that it was necessary, not only to secure the sector's future but also to satisfy consumer expectations. How is Mowali positioned in relation to existing mobile money offers?

Mowali was designed to provide technical intermediation for mobile money operators. We aim to be an “enabler”, in other words to help them deliver new services to their users.

Our services are unconditionally open to all

operators. Our platform and processes are standardised to facilitate integration and provide a seamless service.

Mowali is not in competition with mobile money operators. Like Visa/Mastercard which are not in competition with banks, Mowali “only” facilitates financial flows between end users (customers, merchants, etc.), irrespective of the service provider, the country of origin or the country of destination.

The operators continue to be responsible for their positioning and differentiation strategies: it is up to them to create service offerings, a great customer experience and attractive prices to capture new users and increase usage. Numerous other interoperability initiatives are being put in place locally or regionally, often at the instigation of governments. Is Mowali relevant in this context?

Mowali is very relevant. Ultimately, the needs of both end users and companies are very similar from one country to another. So, we firmly believe that a global solution is the most appropriate for Africa.

Developing an interoperability platform is a complex and costly process. Sharing and therefore optimising investments and operating costs will minimise the unit costs charged to users. That is the key to profitability. It will be harder for regional or local initiatives to handle the same transaction volumes, which will automatically affect unit costs.

In late 2018, Orange and MTN Group announced a joint venture, Mowali, to enable payment interoperability across Africa. Let's look back at this sea change in the world of digital financial services.

Interview with Juan Dominguez, Head of financial services strategy and development for the Middle East and

Africa, Orange

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How will operators benefit from interoperability?

Although mobile money services have existed for several years, most operators still give priority to acquiring new customers and increasing and diversifying usage.

An attractive service offering is still crucial to recruit new users and increase usage. However, the complexity of bilateral integration is hindering the launch of new services, as mobile money service providers must connect to the information system of each individual partner with whom they want to launch new services. Furthermore, customised processes must be created for every partner.

With Mowali, we hope to overcome these obstacles by standardising procedures and enabling operators to access numerous partners via a single connection. What are the main use cases?

There are two use cases where demand for interoperability is the highest: person-to-person cash transfers and merchant payments.

Opening a new bilateral transfer corridor is generally very time consuming. With Mowali, all operators integrated with the platform will be able to instantly offer transfers to any other connected operator.

A similar situation applies to merchant payments. In closed-loop systems, merchants must not only sign specific agreements, they must also establish processes with each mobile money operator.This is all going to change now: once connected to Mowali, merchants will be able to accept payments from any connected operator. This will obviously generate more business opportunities in both the national and international markets.

Financial flows may also be arranged between companies and individuals, governments and citizens or companies, or even between companies. The possibilities are endless: payment of wages, supplier invoices, social security benefits, taxes, etc. The ball is now in the operators’ court. It is up to them to devise the services of tomorrow.

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Will interoperability put mobile money operators in a stronger position?

Interoperability will definitely put operators in a stronger position, as they will be able to provide their customers with new services. It will also ease interaction with banks, large retailers, fintechs, etc. In this respect, the advent of interoperability will force the digital financial services market to reorganise itself.

By connecting with mobile money operators, banks will be able to address new market segments for example. Fintechs, which sometimes struggle to find trade opportunites, will have scores of new partnership possibilities.

Above all, the market is poised to grow massively thanks to new usages. Of course, the competitive pressure can only grow, but if the size and value

of the market increase tenfold, everyone will be a winner! So, how do operators’ strategies need to change?

Today, many operators offer only “traditional” mobile money services: cash-in, cash-out, peer-to-peer transfers, etc. What differentiates them most from each other is the size of their agent network and customer base.

Interoperability is going to “erase” these advantages to some extent. So, it is vital that operators develop innovative new services and an increasingly fluid digital experience. These new elements should underpin their positioning and their added value going forward.

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What is Jumia’s business model?

When we first started out, Jumia positioned itself as a conventional e-commerce company: we bought products and resold them. In 2014, we decided to switch to a marketplace model. Today, nearly 90% of our sales are made by our partners. Our marketplace sells everything from fashion to household appliances, hi-tech products and food. It also provides meal delivery and hotel and flight reservation services. Lastly, we have an app called “Jumia One”, which customers can use, for example, to pay their utility bills, recharge their phones or (soon) print out cinema tickets. What arrangements have you made regarding payment?

There was very little mobile money in Africa when we first started out in 2012, and bank cards were neither popular nor

safe. We therefore invested in a tool that allows our customers to pay cash on delivery. After a period of adjustment, we managed to organise flows efficiently by building our own logistics marketplace, which enables us to deliver either directly or through a partner. Don't cash payments have their limits?

Accepting cash payments helped us get our business off the ground. But there are indeed a lot of downsides: the delivery person must carry change, which raises security issues, and the financial flows can be difficult to reconcile. We have also noticed that when customers have the option to pay on delivery, they tend to change their minds more easily and send things back. So, prepayment has become a priority. Unfortunately, the payments market is very fragmented in Africa. For example, in Nigeria there are

international cards, local cards, instant wire transfers, over-the-counter cash payments, etc. We have therefore set up a payment solution called “JumiaPay”, in which all payment types are managed within a single account to facilitate the buying process. What progress is needed to facilitate online payment?

From a technological perspective, more must be done to achieve uniformity. Most payment operators provide APIs for connecting to their systems; however, these APIs vary from one country to another. So, a substantial development and integration effort is needed. The user experience also needs to be improved, as it is not really suited to online shopping (if they are using their smartphone, consumers have to switch back and forth between the e-commerce app, the mobile money app, their texts, etc.).

Mobile payment, the main growth lever for e-commerce in Africa

Established in 2012 in Lagos (Nigeria), Jumia operates in 14 countries. This leader in the e-commerce space, which the Financial Times has described as Africa's “first unicorn”, has had to deal with the same challenges as its western counterparts in terms of procurement, logistics, etc. However, it has also had to contend with issues specific to Africa, such as the payment methods commonly used by consumers.

Interview with Sami Louali, EVP strategy, investor relations and financial services, Jumia

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Some countries are more advanced than others. In Kenya, for example, M-Pesa provides a very simple payment system for e-commerce. As a result, the order conversion rate is higher. We also use aggregators to handle payment methods that are not directly integrated in JumiaPay. In this area, service levels, incident resolution times and the reconciliation of financial flows need to be improved. It is worth noting though that the market is very young – many of the stakeholders are only two or three years old, so the sector will become more mature. Mobile money services may also be expanded to include savings and loan facilities. How could this impact your business?

Consumer credit is not very common in most of our markets. As it becomes more widespread, we will be able to offer new products and increase our business volume. Mercado Libre, for example, which is a Latin American equivalent of Jumia, generates more than 60% of its sales volume from consumer credit. At Jumia right now, the figure is 0%! So, you can imagine how impatient we are for similar credit solutions to be developed here! However, they must be adapted for e-commerce. A handful of options already exist in various countries, but the administrative processes are very long. It is important to be able to handle electronic signatures and make instant credit decisions. Credit can also take the form of advance payments to merchants. Is that something Jumia might consider?

Credit can also take the form of advance payments to merchants. Is that something Jumia might consider?

Of course. We have been offering this type of financing for over a year, through an SME lending marketplace accessible only to our sellers. How does it work? We collect information on our sellers (sales volumes, service quality assessments, delivery lead times, etc.), and we share it with lenders (banks, microcredit agencies and other financial institutions), which can grant loans almost instantaneously. We have already raised over €3 million in credit. At first, the initiative was managed completely offline. Now, the entire process has been digitised: from onboarding through the application process to the loan offer. The next step is to digitise payment by setting up automatic monthly repayments based on the sales volumes we finance. We therefore create a virtuous circle, enabling our sellers to finance their needs, invest in more inventory, stock new types of products, and prepare for major commercial events like Christmas and Black Friday. Your business's growth potential also depends on your ability to reach sellers and buyers in rural areas. What is your strategy?

Alibaba has handled this issue perfectly well in China by supporting buyers and sellers to set up an account and manage their online store, inventory, etc. As for Jumia, it has created a “Jumia Force”: a network of more than 50,000 agents affiliated with Jumia, who sell Jumia products to their relatives, friends and acquaintances, who

do not necessarily have access to the Internet. They place orders on the site on behalf of their friends and family, and receive a commission. The “Jumia Force” is also tasked with training potential sellers to distribute their products outside their usual geographic area. What proportion of your business is generated by B2B sales?

Right now, Jumia is a B2C platform. We are in discussions with several players in the fertiliser industry, for example, to make it much easier and cheaper for farmers to order their fertilisers, and to deliver greater price transparency. The next long-term step is to develop B2B sales, as is the case in Europe. Our presence in 14 countries is a very valuable asset in this respect!

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Agriculture is a dominant industry in developing countries, yet farmers often struggle to earn a living income: in 2015, 85% of people

below the poverty line lived in rural areas. Low productivity, climate hazards and difficult access to high value-added

markets are the main barriers to development. By enabling access to appropriate financial and non-

financial services, mobile technology plays a key role in rural and agricultural development. Let’s imagine the

daily life of tomorrow's connected farmer: more productive, financially included, perfectly integrated in the value chain and

respectful of the environment.

Using the loT and mobile tools to produce a better harvest

At the start of the crop year, the GPS tracker in the cooperative tractor tells Badra that one of his neighbours has just dropped the tractor off in the shared hangar. He immediately books the tractor on his mobile, and the hiring fee is debited from his mobile money account. When he has finished sowing, he checks the ground temperature and the humidity rate recorded by the sensors installed all over his land.

He purchased these sensors through the cooperative. Connected via the LoRa (Long Range) network, they have a 10-year service life and use very little energy. An intuitive user interface gives him access to a range of essential indicators, and he has chosen to share the data with the cooperative. As a result, the co-op agricultural consultant can anticipate his needs and provide him with appropriate advice during his weekly rounds.

If the humidity rate is too low, Badra gets water from the cooperative shared tanks. The smart sensors on the tank tell him exactly how much water he can take, based on the size of his farm and the fill rate. Thus, all the members of the cooperative are treated equally.

To help himself to water, he scans the tank QR code and is recognised immediately. The tank dispenses the water on a pay-as-you-go basis, taking into account the rules of the co-op and the amount of funds in his mobile money account.

Thanks to the mobile services provided to farmers, Badra can rest assured that his seedlings will grow well. He thinks one of his seedlings is diseased, so he takes a photo of it and sends it to the farming community; in this way, he establishes that the seedling has a mildew infection and finds a solution that has been tried and tested by other farmers in the region.

As the cooperatives in his region work together to resolve the most common problems, it is easy for

Mobile money supporting the farming of the futureAntoine Navarro – Mobile financial services management consultant, Sofrecom

Ronan Paillon – Mobile financial services consultant, Sofrecom

Mali, 2030. Badra is a sorghum farmer in the Sikasso region in southeast Mali. He has been a member of an agricultural cooperative for several years. Thanks to digital tools and tailored

partnerships, he has been able to consolidate his business, stabilise his output and earnings, and embark on new projects without having to worry.

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him to get hold of a video in his local language that explains how to treat his seedlings with a natural, low-cost pesticide solution that is made out of local plants and is not harmful to the soil. The pesticide solution is applied using a crop-spraying drone at low flight altitude. Guided by artificial intelligence, the drone detects infected seedlings and sprays with precision. Quality and traceability to ensure a fair income for farmers

On the day the sorghum is harvested, Badra's cooperative comes to collect the fruit of his labour. The cereal is weighed on a smart scale. Samples are also taken for quality control purposes, using a mobile laboratory that sends the results to an expert in Bamako. The crop is then bagged. All the bags have an NFC chip to guarantee traceability and reassure wholesalers that the sorghum grains comply with the requirements of Codex Standard 172-1989 of the Food and Agriculture Organization of the United Nations (FAO).

This quality certification enables some co-op members to access export markets more easily, and to increase their income. The money is paid into Badra's mobile money account. At any time, he can check sorghum prices in Mali and worldwide to make sure his crop has been sold for the right price. Financial services designed to support farmers

Sorghum is grown in cycles. In October, once he has sold everything, Badra knows he won’t have any more large cash inflows until the following year. To overcome this cash flow problem, he has opened a savings account with his bank. Money is transferred to his mobile money account every month, so that he can manage his cash flow more effectively.

A small amount is also saved in a special sub-account until the next crop year. Thanks to a partnership between the bank and an agricultural supplier, Badra will benefit from negotiated prices when he purchases agricultural machinery and inputs.

To generate recurring revenues, the farmer also turns part of his crop into flour using the cooperative's self-service, solar-powered mills.

He then sells the flour online, by placing an ad on the ”sugufyè” app. He finds a buyer easily and goes to the market a few hours’ drive away with the assurance that he is not going for nothing, and that there will be some buyers there.

Badra is thinking about buying another plot of land for the next crop year. Thanks to his income, the stability of which is proven by his healthy mobile money account, he will be able to get a low-interest loan. Especially since the cooperative will stand surety for him, and deduct the repayments from the money for future crops.

To avoid problems in the event of a bad year, he takes out crop insurance for his two plots of land. The insurance company's drones will map his fields and will be able, if necessary, to appreciate any damage caused by drought or floods.

18


ConclusionThere is no question that, over the past ten years, Africa has been

very proactive in terms of creating new and innovative payment services, developing smartphone-based services and changing user habits.

While this is a unique situation, driven by Africa's vitality and the need to bypass its lack of infrastructure, we should bear in mind

that payment mechanisms are changing profoundly and radically all over the world. If I had to explain in one word why a “payment

revolution” is looming, I might say it is because EVERYTHING is changing.

Emerging trends everywhere point to the same movement of change, which can be described quite simply as a major reconstruction of the value chain.

Digitisation is facilitating the entry of Internet giants in the market. For data analysis experts, gaining access to individual payment data is like striking gold, first of all because it gives them detailed knowledge of individual needs, and secondly because the payment medium (the mobile phone or smartphone) is a fantastic sales and advertising channel and therefore an additional source of revenue.

Obviously, the changes in the mobile payment services market will bring major challenges both for traditional banks and telecommunications operators. They cannot afford to loosen their grip on flows such as money transfers, or relinquish their role in financial inclusion. Market share recovery must be their top priority.

The forces of change are building up and must be addressed immediately, in a structured manner. The challenge is to continue innovating to generate growth and income. The rest... is already another story. It is up to the various players in the sector (banks, operators, credit institutions, etc.) and the authorities of the region to anticipate future developments, measure their importance for Africa’s development, and make sure that these fabulous technological, commercial and regulatory opportunities are effectively used to boost Africa's economic development and the well-being of its people.

Claire KhouryHead of communication, marketing and CSR,

Sofrecom

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« BigTechs, interoperability, e-commerce: challenges and opportunities of digital financial services» is published by :

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Publication manager:Claire Khoury

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