African: Mobile Money is the future of Tourism Business in Africa
By Eran Feinstein
International travel companies hoping to penetrate the African market must include mobile payments as a strategic initiative, according to recent surveys.
Africa has been called the world’s mobile-first continent and the fastest-growing travel market in the world. In order to dominate in the African market, mobile payments must take priority in the corporate agenda.
Report: Growth of African tourism
From 26 million international tourists in 2000 to 56 million in 2014, according to The World Tourism Organization, African tourism is growing steadily. It is not only African travel and hospitality companies that are poised to gain. International conglomerates, like Marriott, will profit in Africa, too. The hotel chain added 9 locations throughout Africa in 2015. The company plans to expand from 10 to 17 African countries, and is receiving a $1.5 billion capital investment for the projects.
As African tourism grows, so does international interest from companies poised to benefit. Those planning to penetrate the market must understand its mobile landscape.
Surveys: Growth of African mobile payments
In a recent survey by Statista, the number of mobile payment users in Africa in 2011 was 54.54 million and is expected to nearly double to 101.34 million users in 2016.
Nowhere in the world is mobile penetration so substantial, and nowhere in the world have mobile payments seen such growth in such a short period of time.
The African continent is a perfect backdrop for mobile payment innovation.
While World Bank’s Lead Economist for Development Research, Leora Klapper, reports that 62% of the world’s population has a bank account, in Africa the reality, according to a McKinsey & Company projection, is that 80% of the continent’s population is not connected to formal financial services.
This is one of the major contributing factors to the penetration and growth of mobile payments in the region. By and large, Africans do not use banks, but still need a way to make payments, book air travel, and secure hotel reservations.
In a separate survey reported in the Financial Times, mobile payments in Africa doubled from approximately $5 billion in 2012 to well over $10 billion just two years later.
With the growth of African travel mirrored by the growth of African mobile payments, combining the two seems like a sure bet.
Survey: African travelers want mobile
An independent research study commissioned by Amadeus and run by strategy consultancy, Inquisition, uncovered that Africans are increasingly looking for agents that offer online and mobile services. Key findings from the survey of over 2,500 travelers across Angola, Ghana, Kenya, Ivory Coast, Nigeria, Senegal and South Africa, include:
1. Travelers increasingly take control of their bookings using online tools, with 25% of them booking directly with the service provider, such as the airline or the hotel
2. Travelers want to manage travel themselves, with 25% reporting they go online to use a travel booking website to make reservations and confirm their hotel
3. Travelers are increasingly booking travel arrangements via mobile, with 14% of the African travelers polled using their mobile phones to pay service providers
Report: Kenya as a microcosm
According to the International Reporting Project of Johns Hopkins University, Kenya can be considered a microcosm for the African continent due in part to its high literacy rate, progress as “one of the most promising and prosperous African nations,” and being one of the most popular tourist destinations in the world.
As such, statistics like those presented by the Central Bank of Kenya, which show that 60% of the adult population are using mobile money transfer, highlighted by the success of sites like the hotel booking website Jovago, proves how mobile payments ease people’s lives in the African travel industry.
Using the success of mobile payments within the Kenyan microcosm, we can clearly visualize the future of the travel industry throughout the African continent.
Mobile payments as a competitive edge
These studies and reports point to one absolute: international travel companies – whether they are airlines, hotel chains, or large global travel agencies – must offer mobile payments to the African travel and tourism market. Doing so positions them to gain on their competition and establish a stronghold in a market and a region that is expected to bloom.