MTN wants to put a bank in your pocket, and a small business
You often read stories about how new technologies mean that less-developed countries in Africa can "leapfrog" ahead, skipping over older generations of tech and embracing the latest stuff to create innovative new businesses and tools. Most of the time, however, you don't really see this actually happening. But, listening to what MTN has to say about its new Mobile Money initiative, I really do feel like this may be an example of the kind of leapfrogging I'd like to see happening in SA.
It seems like what MTN is doing is taking South Africa's cellular architecture and the phones people have right now, and designing a really creative product for those that will help people enter the formal banking system, and perhaps even make a few bob selling airtime to friends and family. More details, obviously, are needed, but the product seems to be smart, innovative, logical, and practical. Stories like this make one believe that breakthrough leapfrogging is truly possible. – FD
ALEC HOGG: Cellular network MTN has launched a Mobile Money Resellers project to assist with unemployment in South Africa or at least, that's what the advertising tells us. Joining us now for more on this, is Peter Malebye from MTN. Peter thanks for coming through to the studio. You decided to take out adverts in the Sunday Times. You're for helping reduce unemployment with the Mobile Money. Before we go into what your process is, Mobile Money in an MTN sense is…
PETER MALEBYE: Thank you very much, for the opportunity. Mobile Money in the sense of MTN is our Financial Services Business Unit, which is specifically focusing on how we make financial services as accessible as telecommunication services are. As you would see, in most of the operations where MTN is, we do have a Mobile Money division and in South Africa, we've been running the division since November 2012. Mobile Money is therefore our Mobile Money division, which is focusing on financial services.
ALEC HOGG: I understand that internally, but how's it going to affect the lives of your customers? I have an MTN phone. I can start using it in the same way as I would be using MPESA.
PETER MALEBYE: That is correct. That is exactly what the opportunity is and what we're effectively doing – in terms of affecting the lives of the end users – is we are making it more accessible for them to be included into the financial economy. With Mobile Money South Africa, consumers are effectively able to open a bank account from their homes without having to go anywhere, and without any costs associated. This means they can transact in the main economy. What we're saying is that as long as you have an ID number and a phone in your hand, you should be able to participate in the financial economy.
ALEC HOGG: All right, so we have that on the one hand. Now, you are allowing or encouraging people to become resellers. How does that work?
PETER MALEBYE: For me it's important just from a context…to explain from a South African perspective, we know there's a huge focus on unemployment. I think that MTN, as with all other corporates, and government…it's at the top of our minds what we do in that regard. To be clear, MTN is not offering people job opportunities in this specific initiative. What the initiative is meant to achieve, is to enable people to be able to generate an extra income on the side. How do you do that? MTN today, uses many distribution partners to distribute its airtime from a retail perspective and from an informal perspective. What we've effectively done with the Mobile Money initiative is we are allowing all consumers to be resellers of airtime. This means that everybody has an opportunity to make an extra income by reselling airtime across any of the networks, so it's more convenient. It's what is happening today, but what we have done is we have made it more convenient. What we've also done is we've opened it to anyone to participate in that.
ALEC HOGG: Practically speaking…how does that work? I have an MTN account. How do I sell airtime to Andrea who is working the camera there?
PETER MALEBYE: Practically speaking, the way it works is that you have to open a Mobile Money account. We have a string, which is *120*668#. You open your own bank account and within five minutes – now, if we had the time – you'd be able to open your own bank account. Once you have the bank account, you need money in that account. In order for you to have money in that bank account, you have to go into your Pick & Pay or into your Boxer store. Now, you have money in your bank account.
ALEC HOGG: So you deposit it.
PETER MALEBYE: Exactly…you deposit it. Now you have money in your bank account, I'm sitting with you, and I tell you I need airtime. Gone are the days where I need to go to a spaza, the next retailer, or go to a garage, and buy airtime etcetera. What we're effectively saying is you can sell airtime to me directly. What you need to know, is my mobile number. I then need to give you the money – R30.00 or whatever amount I need to purchase.
ALEC HOGG: In cash or you could transfer it to me as well.
PETER MALEBYE: I think for now, in terms of the market we're targeting is that we'll be targeting people who will be buying from you in cash. However, they can also buy from you directly by using their account.
ALEC HOGG: What's my mark-up? I don't want to just give you…
PETER MALEBYE: No, I'm coming to that and that's where the opportunity is. This means you'll be able to buy airtime on my behalf, which will be deposited directly into my Mobile Money airtime account. The mark-up you'll make from an MTN perspective once that has happened, is that you'll get a five percent margin that will be paid directly into your Money account in real time. This means it's another opportunity because you don't have to buy in bulk, only to be paid at the end of the month.
ALEC HOGG: That is so clever, but what are you going to do to Blue…resellers and people like that?
PETER MALEBYE: What we're saying is that it's becoming more and more convenient. Technology allows us to do that, which means more people can actually participate in that. To answer your point, there are successful businesses, which have grown by reselling airtime. Right now however, it means that young people, while they're still struggling to understand what they want to do with their lives they have something they can do on the side – they can become resellers of airtime. Social grant recipients receive money. You don't have an idea of what you could do. You could immediately become a reseller of airtime. It means that airtime is moving closer to where the communities are and I think it's an opportunity because it will be easier for people to sell within their communities.
ALEC HOGG: It's very clever. Can I access the money in the account if I want to buy bread?
PETER MALEBYE: Yes, surely. That's an opportunity for us. Mobile Money is a fully-fledged bank account, which means that what you're able to do…people can pay you – into that account, you are able to buy airtime, you're able to buy prepaid electricity, and you're able to send money to people. What you could do with people in remote areas: if there's a Pick & Pay box around, you are able to use Mobile Money to send money there. You are able to go into a Pick & Pay to actually buy groceries using Mobile Money.
ALEC HOGG: Last question: all networks just MTN?
PETER MALEBYE: It's all networks. Its network-agnostic, so across any of the networks in South Africa, you should be able to buy airtime. You should be able to be a reseller of airtime across any of the networks.
ALEC HOGG: It's a great initiative. Well done Peter, (and your team) and let's hope you have huge success with that.