Mobile brings financial services to Africa

The growth of mobile penetration in sub-Saharan Africa is increasing accessibility to financial services such as life insurance.

JSE-listed Trustco Group's MD, Quinton van Rooyen, says: “Insurance is a 200 year-old business, and mobile phones have been around for 20 years. Yet, insurers control 6% of the African market, and mobile has 50% of the market. Clearly, mobile has done something right where insurance has not.”

This follows the announcement of Zimbabwe mobile operator Econet joining forces with Trustco Mobile and insurance company First Mutual Life (FML) to roll out a mobile life cover solution called EcoLife in Zimbabwe.

Van Rooyen adds that the solution could not have come at a better time: “The biggest challenge for us was to roll out the service to the lower income mass market at a cost-effective price.”

According to Van Rooyen, the JSE-listing had enabled Trustco Mobile to acquire the much-needed capital to drive the product into sub-Saharan Africa.

Econet's CEO Douglas Mboweni says the Zimbabwean market is ripe for financial services delivered via mobile phone.

“To the Econet customer, we are building a mobile service that becomes part of people's lives. It will give millions of Zimbabweans access to life cover insurance.”

Mboweni says the decision to partner with Trustco Mobile and FML was spurred by the fact that Econet was looking to deliver services accessible via a mobile phone to build loyalty with subscribers and retain customers.

“One of the clear issues in the Zimbabwean market is the fact that the interest rate is very high, and people demand life cover that is affordable and accessible.” He says Econet is introducing education awareness campaigns to help people use the Ecolife service.

“Technology is the key enabler of the global village. People living in Namibia and elsewhere in the world have families living in Zimbabwe. If a family member living abroad dies, Ecolife enables the family members to be paid out in other countries.”

Ruth Ncube, MD of FML, explains that the partnership has significantly widened its potential customer base.

Without giving detail, Ncube says FML is working with the two telcos to develop additional insurance products that can be accessed via a mobile phone.

According to Pyramid Research, mobile financial services are becoming increasingly important throughout the developing world. In a report, the analyst firm states the availability of formal financial services is limited to certain geographic and income ranges, often leaving the majority of the population to rely on unreliable and costly informal channels.

The report states: “This gap in access to financial services provides an opportunity for mobile network operators because they have a number of assets allowing them to address the problem, including network and distribution coverage, a strong brand, high penetration and the means to drive profits from high-volume, low-value transactions.”