Standard Bank: Accelerating towards Africa’s digital future

By Nina Triantis, head of telecoms and media for Standard Bank Group

Covid-19 has impacted the globe in unimaginable ways. While all industries and sectors have been altered to varying degrees Africa’s technology, media, and telecom (TMT) sector has for the most part seen a boon because of the pandemic.

The acceleration of digital adoption, driven largely by professionals working from home and businesses digitising their offerings, has laid the foundation for growth in telecoms infrastructure and investment in Africa.

Covid-19 has led to a significant increase in web traffic driven by telecom meetings, and other activities. In fibre-to-the-home, demand for broadband surged in more established markets such as South Africa and Kenya. In South Africa, the government granted temporary emergency wireless spectrum to operators to allow them to add network capacity and implement upgrades to deal with the crisis and manage for the increased demand.

Corporates are also accelerating cloud adoption spurred on by investments in African data centres by big-time players such as Microsoft and Amazon Web Services.

Other tech players have also benefited with increased demand for laptops, mobile devices, teleconferencing software and security software.

Tech-enabled sectors – such as e-commerce – have seen strong growth while fintechs see significant increases in online, digital, and mobile transactions and the migration to cashless accelerates across the continent. Increased mobile and broadband penetration have been facilitators to African fintech whilst financial inclusion is also gathering pace.

As a result, interest from investors has been exceptional and points to an appreciation of Africa’s potential. Telecoms infrastructure across the board is in very high demand.

Private equity firms have been active participants. In September, African private equity firm Helios Investment Partners invested in Thunes, an emerging market fintech. Last year alone, venture capital firms invested $282,500,000 in African fintech startups.

Banks have also been incubating and investing in fintechs. Two such examples for Standard Bank include the platform OneFarm in Uganda as well as our investment in fintech Nomanini in South Africa in 2019.

Although over 400 million people across sub-Saharan Africa still don’t have access to mobile internet, mobile broadband networks cover more than 70% of the population, signalling huge opportunities for digital banking to succeed with the right offerings.

Mobile has already played a key role in facilitating digital financial services with many mobile operators building their systems around being able to transact on a mobile phone. In Kenya, M-Pesa’s mobile offering has evolved into a fully-fledged financial services offering, allowing for mobile payments, savings products, and lending. It is a key driver of financial inclusion and providing financial services to the segment of the population that cannot access a traditional banking account.

Mobile has also played a key role in breaking down ecosystem and interoperability challenges. In the past, moving money between platforms was impossible, but now subscribers can move money between different mobile operators seamlessly. We are also seeing the emergence of players such as MFS Africa, moving money across borders.

We expect to see this mobile financial revolution spread from East Africa into Southern Africa and South Africa as mobile operators in these regions make progress into mobile financial services. We also expect mobile financial services to take off in West Africa, emulating the progress which has already been made in Ghana.

This could mean greater partnership amongst mobile operators as they attempt to cover larger swathes of the continent by investing in mobile payments solutions across different markets, although we have yet to see that in a material way.

For increased digitisation to happen there will need to be an increase in smartphone adoption. This rate of adoption will be determined by many things but if one is to penetrate Africa more deeply one must find the right price point for a mobile.

With home learning and working, companies and consumers in Africa are calling for more availability of broadband. The price points for services offered will be important particularly for certain segments of the population, reflecting the impact of Covid-19 on the spending of consumers.

Nevertheless, the increased broadband requirements are spurring additional investment. In South Africa, companies such as CIVH, Metrofibre Networx, VOX Telecoms as well as the mobile operators are increasing their investment into fibre-to-the-home and fibre-to-the-business. What we expect to see next in South Africa is investment going even deeper into townships and more rural communities.

On the continent as a whole, Liquid Telecom has already built the biggest fibre network spanning over 70,000 km and we can expect to see more investment from them moving forward. The company is also making significant investments in cloud infrastructure.

With the exception of Liquid Telecom, Safaricom and Wananchi in Kenya, we have however not seen a lot of investment into fibre-to-the-home on the rest of the continent, especially in West Africa where broadband is mostly driven by investment in mobile technology.

With the likes of MasterCard and Visa entering markets focussed on financial inclusion we will see an acceleration of card penetration in Africa as they advance, form more partnerships, and continue to invest in startups as they have.

We will see more intersections between banks and mobile operators as well as increased partnerships in the future. The platform business model will also become more prevalent as banks, telecom operators and other players look to provide a plethora of services in one place.

Opportunities exist and the investments that we have seen in the recent months, demonstrate that business is ready to take advantage of them. Africa must accelerate its digital journey to provide these businesses with the opportunity to do just that.