MTN has signed deals with global payments platform Mastercard and Jumo, a mobile financial services company, to boost financial inclusion across South Africa and the rest of the continent, pivoting on revamped remittance channels and easy access to mobile loans.
MTN last year recorded a 37.3% increase in fintech transaction volumes to 8.3 billion transactions compared to the previous year. Transaction values also went up 61.6% to $135.2 billion (R2.6 trillion).
The South African mobile company, which also operates the MoMo wallet across Africa, has now signed “definitive agreements with Mastercard for a minority investment of up to $200 million at a valuation of $5.2 billion” on a cash and debt-free basis.
The agreement complements the two firms’ commercial relationships aimed at supporting development and growth of financial technology and infrastructure to drive financial inclusion across the African continent.
“This commercial relationship is a key enabler for the acceleration of our fintech business’ payments and remittance services,” MTN said.
In 2023, a growth of 54.9% in its e-commerce segment and a further 78.9% leap under remittances drove MTN’s overall revenues in the six months to June. The mobile wallet contributed a growth trajectory of 20.7% over the same period compared to a year earlier.
The company is now geared to grow financial inclusion in the South African home market. To achieve this, MTN, under the MoMo mobile money unit, signed an agreement with financial technology company, Jumo, to create Qwikloan, a short-term mobile loan services.
“Qwikloan enables MoMo users to obtain small, short-term loans on their mobile phones, ranging from R250 to R10 000 depending on eligibility, through a seamless application process available via the MTN MoMo App,” the two companies said yesterday.
Quickloan will be seeking to disrupt the traditional financial services sector lending sector that has high interest rates of up-to 24% on short-term loans. The new service will come onto the market with a lower interest rate of about 10% for the short term loans, utilising MTN MoMo’s payment infrastructure and Jumo’s core banking infrastructure that has AI prediction capabilities.
“MoMo’s Qwikloan offering is a testament to our dedication to providing financial solutions that prioritise accessibility and affordability. In these challenging economic times, our goal is to empower South African consumers by offering a reliable alternative with significantly lower interest rates compared to banks,” Bradwin Roper, chief financial services officer for MTN South Africa said.
The service went live in South Africa in December through the MTN Mobile Money app. The two companies are now opening up the short-term loans service to feature phones through the UUSD platform. This would enable South African individuals and informal traders to fund productive and sustainable ventures, without the need for costly data or smart mobile devices.
Joe Mucheru, the president for Jumo, said, “Our work with MTN will support entrepreneurs who need simple, quick access to working capital to grow their businesses. This work demonstrates how partnerships between financial technology companies such as Jumo, and mobile money providers are essential to driving financial inclusion and creating more opportunities for customers to borrow and save conveniently.”
He added that there was further potential for the two companies to “grow eligibility and accessibility by introducing bank partners” to the initiative South Africa has one of the most sophisticated and highly developed banking systems in Africa but has been a latecomer to the mobile money scene.
However, “working with partners to build the infrastructure they need to achieve” financial inclusion goals and uptake of mobile financial services will aide the South African fintech and mobile money scene.