In Senegal, as in Côte d’Ivoire and now Mali, the Orange operator is on its guard. It has learned to respond quickly to the commercial attacks of Wave Mobile Money, its new big rival from the United States.
The latest development is that on 3 December, Orange Finances Mobiles, which markets Orange Money in Mali, announced a 1% reduction in withdrawal fees for amounts between 0 and 1 million CFA francs ($1,716), as well as a fixed fee of 10,000 CFA francs for transfers over 1 million CFA francs.
Further than Wave
In the land of Teranga, Cheikh Tidiane Sarr, MD of Orange Finances Mobiles Senegal since September 2021, has gone further than Wave. At the end of November, the former director of cabinet of the CEO of Sonatel, Sékou Dramé, announced the removal of withdrawal fees and the application of a fixed commission of 0.8% on sending money.
Is this enough to impress the Senegalese consumer base? Not necessarily, explains this ‘Sonatelien’ who joined the group in 2003, after graduating in industrial engineering and telecommunications systems from the Hassania School of Public Works in Morocco.
At the end of November, Orange Money Senegal announced a drastic reduction in rates for withdrawing and sending money. How do you manage to pay your network of intermediaries with dignity?
Cheikh Tidiane Sarr: We have announced an average 30% increase in commission for our intermediaries, even if it means recording a zero margin on the money transfer business.
Our mission has always been focused on creating balanced value so that it is mutually beneficial to all parties. This is what allowed us to have regular price cuts in 2012, 2014, 2016 and 2018, and allowed us to support the distribution network while giving more purchasing power to end customers. In 2012, transfer tariffs in Senegal were 7%, in 2020 they were 3%, but this balance has been abruptly broken.
Some officials are convinced that lowering prices will give people back their purchasing power, but in reality, the gain from this move is yet to be demonstrated. In the space of six months, 5,000 distributors – out of a total of 45,000 – have already disappeared because of an unbalanced price cut.
20,000 of them report serious difficulties, and some of them have resorted to illegally charging for deposits because it is a matter of survival for them. This has never happened before, and we are negotiating with them to bring them to their senses because all this is also detrimental to the customers.
How do you guarantee the financial balance of your activities in this context?
Today, we have almost no income from this activity, but the objective remains the same: each service must be at least zero profit. This is the only way we can continue to make the investments we need to innovate. If we have to have zero margin on money transfer, we are prepared to do that because the market demands it and the distributors have to survive.
So on the money transfer side, we give everything back to the network. To compensate for this loss of income, we must continue to work on volume and win over customers. But we need to diversify by further developing the ecosystem of services, which already includes merchant payments, bill payments, transfers between bank accounts and Orange Money.
For example, we have just launched a loan service with Baobab, where we already have 20,000 customers, and we will offer Orange Bank’s services once the service is available in Senegal. We are also going to increase our partnerships.
In your opinion, is the state playing its role as referee in this competition with Wave?
The Central Bank is doing its job rather well. There is always room for improvement, but it is going in the right direction. A project to improve and strengthen the regulatory framework for fintech is currently being prepared, and we have been asked for our opinion.
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