FinTech

Overcoming the treasury challenges of operating in Africa

Sike Bamisebi – Chief Business Officer, Cellulant shares her insights

Africa offers huge opportunities for businesses, but many multinationals struggle to reach their full consumer base on the continent – and, even when they succeed, reconciling payments can be an inefficient drain on resources. A fragmented payments ecosystem is to blame. Sike Bamisebi, Chief Business Officer at Cellulant, shares her insights on the opportunity for treasury teams to overcome these challenges:

Africa is home to a flourishing and exciting economy, promising enticing growth prospects for international businesses. Yet the continent yields a number of challenges – most notably its heavily fragmented payments ecosystem, which requires businesses to offer a complex array of payment methods to meet consumer demands. The resulting challenge is one that already poses significant issues for small local businesses – and these are multiplied for multinational corporations trying to reach a wider customer base on the continent.

For instance, an airline operating in Africa needs to receive payments from customers in each of the countries they fly to. In South Africa, where debit and credit cards are widely accepted, the airline might have a similar payment process to those it is familiar with in the US or Europe. But in most other destinations, card uptake is far lower. Customers are more likely to pay using mobile money, a service provided by mobile network operators (MNOs), with each country’s market split across a range of non-interoperable MNOs. For instance, three different telecommunications companies share a roughly even split of the Zambian consumer base, which means that to maximise their customer reach in the country, businesses must set up separate accounts with each provider.

This means the treasury team has to manage and maintain three separate mobile wallets while performing reconciliation and managing customer services through three different platforms, all to serve clients with just one payment method – in just one country.

Multiplied across different payment methods and countries, this administrative burden can become crippling.

Progress through collaboration

The challenges facing treasury teams can sometimes be so great that they restrict a company’s growth on the continent or cause a business to reconsider entering African markets in the first place. Thankfully, there is a solution. By partnering closely with fintechs and banks, corporates can expand their reach while limiting their exposure to complex payment systems.

To this end, a number of collaborative networks have sprung up, within which fintechs have developed pathways to connect corporates and their banks to popular African payment service providers (PSPs), such as the mobile network operators responsible for mobile money wallets. By joining these networks, businesses can complete the loop of key payment stakeholders – enabling them to offer the full range of payment options to their customer base. Crucially, this can be done without entering into relationships with the huge number of PSPs that service the continent’s consumers. Instead, fintechs are able to provide a single entry point for businesses via an application programming interface (API).

This means merchants can receive all their payments – facilitated by any provider in the network – in one place. At Cellulant, for instance, we connect our bank and business partners to a network of millions of consumer mobile wallets – turning payments from a source of friction into an opportunity for businesses to expand their reach multiple times over.



Beyond the expanded reach, this approach also facilitates smoother back-office processes – imposing a single, uniform process for businesses to manage reconciliation alongside reversals, refunds and disputes. This can drive significant time and cost benefits for treasury teams.

There are also benefits for the customer experience – delivering more payment flexibility than a merchant could offer independently. Furthermore, the same network being used to receive payments can help treasury teams with the payouts the business itself has to make. Alongside managing payments, these partnerships make it possible for businesses to navigate the manifold regional and cross-border payment regulations across Africa.

What does the future landscape look like?

While mobile money looks set to remain a central feature of the African payments landscape, there are many cases where bank-fintech collaboration could help change customer behaviours and drive the adoption of simpler payment methods that are more straightforward for both merchants and consumers.

One option growing in popularity across different markets is payment by bank transfer, which has the potential to streamline a number of payment scenarios for businesses and their clients. For instance, while mobile wallets have grown hugely in popularity since their inception in the mid-2000s, most consumers still keep most of their cash in bank accounts and top up from there before transferring to the merchant. This often makes for a convoluted payment process that typically involves leaving the house, withdrawing cash from an ATM, locating the nearest street vendor for the chosen mobile money provider and paying them in cash to initiate the top-up.

With corporates, banks and fintechs working together, however, consumers can be offered a simpler option – topping up via bank transfer – that still enables them to use their chosen payment method. Not only is this a more flexible option for the consumer, who no longer has to scramble to keep their mobile wallet topped up each time they make a transaction, it is also more efficient for banks and businesses – reducing the number of steps in the process and cutting down on transaction fees.

Following widespread acceptance of this technology, we might even see African consumers turn to paying merchants directly via bank transfer – cutting out a further layer of complexity and reducing transaction charges accordingly.

The African fintech and payments arena is an exciting and innovative space. – and forward-thinking businesses can take advantage of innovative technology to support their expansion into African markets. Piecing together the once fragmented ecosystem, the collaboration between businesses, fintechs, banks and payments providers has the potential to streamline payments and the associated back-office processes, solving a huge challenge for treasury teams operating in the region.

Sike Bamisebi – Chief Business Officer, Cellulant



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