Botswana, Mauritius, Zambia first in line for Absa’s Timiza roll-out
Botswana, Mauritius and Zambia will be in the first wave of the extension of Absa’s Timiza wallet banking platform, Vimal Kumar, Absa’s CEO for retail & business banking and chief digital officer, told The Africa Report.
“None of the three markets has any wallet banking capability at present,” meaning an opportunity for entry, Kumar said. “The platform will be customized to recognize the specific needs so there is sufficient local content.”
Absa said in February that the Timiza platform in Kenya now has close to 5 million customers. Timiza offers 30-day loans, savings accounts and insurance.
Through a partnership with Safaricom’s mobile money transfer service M-Pesa, the platform’s transaction data are used to determine the creditworthiness of borrowers.
- The credit requirements are not as stringent as for traditional loans, as the ticket sizes are smaller with a maximum US$1,000.
- Kumar says that Absa is working with mobile network operators in individual markets to create bespoke programs to avoid being “entirely dependent on M-Pesa for expansion.”
Having completed the transition from the old Barclays brand in all of its markets, Kumar says that Absa is looking at rolling out a similar wallet banking platform in all countries where it operates.
- “The nuances of individual markets add complexity to a ‘lift and drop’ of M-Pesa,” he says. “Each country will have their own unique value propositions.”
Kumar declined to say when Absa may seek to enter Nigeria, where it has a representative office offering corporate banking and broking services.
- “There is a Nigeria strategy that is evolving as we speak. Suffice to say Nigeria is crucial to our pan-African plans.”
Timiza is essentially “Absa-branded M-Pesa,” argues Christo Vrey, a digital banking strategist in Port Elizabeth, South Africa.
- M-Pesa, he notes, has had only “marginal success” outside of Kenya. In the light of repeated attempts to bring M-Pesa to South Africa, Timiza will never be deployed there, he says.
Timiza’s operating process have “bedded down with very well-established infrastructure,” Vrey says. Its success in new markets depends on “whether it can stick as a value proposition.”
According to Kumar, “mobile money is driving financial inclusion. We believe that providing access to financial services is a critical step towards reducing both poverty and inequality.”
But economists led by Milton Bateman have questioned the contribution of M-Pesa to reducing poverty.
Given high failure rates for the businesses run by individual entrepreneurs, he argues that encouraging even more of them may affect the functioning of the local economy, and risk the livelihoods of micro-entrepreneurs.
- “The extra competition created in the local economy will inevitably contribute to forcing down profits and wages in existing microenterprises, thus increasing poverty,” he writes.
- Much of the value generated by M-Pesa is immediately channeled as dividends to wealthy shareholders abroad, Bateman argues.
- The “local growth trajectory is therefore undermined in Kenya thanks to M-Pesa.”
- In Kenya, he argues, the result has been increased over-indebtedness and the promotion of a “no growth informal economy.”
Bottom Line: The transferability of M-Pesa based products to other African markets and their contribution to widening real financial inclusion still remains to be proved.