Tigo heats up mobile money competition in Africa

Tigo, a subsidiary of Millicom, with operations in seven African countries including the Democratic Republic of Congo (DRC), Senegal, Ghana and Chad, this week announced the launch of a cross-border mobile money remittance service between Rwanda and Tanzania.

Millicom also has operations in Bolivia, Al Salvador, Guatemala, Honduras and Paraguay, and the company is hoping its cross-border mobile money service will soon be connected to all these countries.

According to the company, the new service will particularly benefit businesses with cross-border trade, Africans who have emigrated, truck drivers and importers and exporters.

By launching the mobile money service, Tigo hopes it will be able to wrestle some customers from service providers providing similar services in the region. This is expected to heighten competition in the provision of money services and reduce the cost of mobile money transactions.

Tigo’s mobile money service is expected to compete with similar services from MTN and Airtel. Three years ago, MTN partnered with Western Union to introduce international remittance services to 21 countries where MTN, Africa’s largest operator, has a presence.

India’s Bharti Airtel, the region’s second largest operator also runs the Airtel money service across over 17 African countries where the company has operations.

In East and Southern Africa, including Tanzania, Mozambique, Lesotho and DRC, Kenya’s Safaricom uses the M-pesa mobile money service to remit and receive money across the two African regions.

Most people in Africa are now using mobile financial services to buy goods, pay utility bills, buy mobile airtime as well as receive funds from abroad.

Generally, most people in Africa do not have bank accounts and customers typically have to travel long distances to access traditional banking facilities. In many cases, customers have to spend many hours in queues to make transactions through traditional banks. Mobile money has also attracted a low-income population that typically resides in rural areas. As a result, Africa is experiencing an explosion in mobile money transfer services as banks and mobile service providers compete for customers who otherwise do not have a bank account.

The increase in mobile money services has also been helped by increased accessibility to mobile phones both in rural and urban areas as mobile operators continue rolling out their networks

At the same time, operators are also offering mobile money services in order to cushion the impact of declining revenue from the voice market, a result of stiff competition in the provision of voice services.

“The fight by operators to outdo the other in the voice market has made communication cheaper in Africa. This time again, we are seeing a fight in the provision of mobile money services by operators. This we expect will also result in cheaper services,” said Amos Kalunga, telecom analyst at Computer Society of Zambia.

In Zambia alone, Airtel managing director Charity Lumpa said the company’s mobile customer base has hit 1.8 million with 500,000 transactions every month, while MTN claims it has over 1 million mobile money customers.