This week, MTN announced their plans to spin out their mobile money business from the telco's core business. Additionally, Airtel announced that it sold a minority stake in its mobile money subsidiary, valuing their mobile money business at $2.65 billion.

This follows a trend - back in April of last year, Safaricom and Vodacom completed the acquisition of the M-Pesa brand and platform. Shortly thereafter, I interviewed Vodacom's Head of M-Pesa, Chris Williamson, who appeared in this episode of The Flip. He described the joint venture as the R&D brain and an opportunity for the digital business to unlock investment. From a recent twitter thread,

https://twitter.com/TheFlipAfrica/status/1373569749813231618

While M-Pesa is busy building out its digital, cloud-based, open platform, and as MTN works to spin out its MoMo business, it will be quite interesting to see how these independent, well-distributed, and well-capitalized mobile money firms impact the larger fintech landscape on the continent.

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USSD in Nigeria

The big outlier of the mobile money conversation, of course, is Nigeria, where there is no regulation enabling telco-led financial services.

In an environment with low smartphone and data penetration, USSD services are necessary. But in a bank-led market, the banks are left with a bill. In Nigeria, bank-led financial services for the mass-market left banks with a ₦42 billion ($110 million) bill for USSD services.

And this week, an agreement between the Central Bank of Nigeria and the Nigerian Communications Commission has introduced a new flat fee of ₦6.98 per transaction.

If USSD financial services are tremendously expensive at scale for everyone but the telcos, what does it mean for financial services on the continent, especially in light of the spin outs discussed above?

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Consumer Education & Digital Literacy

I think I take digital literacy, and the intentionality with which people are taught to use digital products, for granted.

I stumbled upon an article this week about the default games on Windows computers, like Solitaire and Minesweeper. These games were not merely to entertain, but to teach us how to drag & drop and left click/right click, respectively.

I am reminded of the large amount of gamification elements in Chinese social apps - it is, explicitly, a design element to appeal to less tech-savvy users.

And we are seeing these strategies implemented on the continent, as well, by fintechs like PalmPay (which is, perhaps not surprisingly, an investee of the Chinese firm Transsnet).

We're also perhaps witnessing an interesting Catch-22 - on one hand, USSD plays a huge role in digital inclusion, particularly amongst those who do not have or utilize data-enabled smartphones. On the other hand, USSD - and punching in a long string of numbers to complete a transaction, - is a terrible user experience.

With a low percentage of data usage, there is a missed opportunity to gamify the experience for less tech-savvy users on the continent.

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Thanks for reading,

Justin