- How to get it right in DRC
By Christian Bwakira, MFS Africa’s Group Chief Commercial Officer
To understand the dynamics of Africa’s payment ecosystem, it is crucial to recognise what sets the continent apart from other markets. Unlike economies such as Europe, Africa lacks a uniform infrastructure, especially in francophone countries.
The continent presents unique challenges that require unique solutions. When a global enterprise enters the continent, it must understand the dynamics, regulatory frameworks, and local business practices. Failure to grasp how things work in Africa can hinder the ability to connect sellers and buyers and impede business success. Adapting to Africa’s payment landscape involves considering the available payment methods, developing user-acquisition strategies, and understanding the varying contexts and requirements of each country.
Case Study: How it’s done in the DRC
The Democratic Republic of the Congo (DRC) faces its own set of circumstances. The country lags its neighbours on various aspects of financial inclusion, including account ownership, whether bank or mobile money account, and accessibility to cash points. Only 26 percent of the adult population has any kind of bank account, significantly lower than the regional average of 43 percent. Among the reasons cited by 35 percent of adults without a financial institution account is the significant distance they must travel to access such services. To put things into perspective, the DRC is a vast size, covering 2.3 million square kilometres, making it the second largest country in Africa and 11th largest globally. In total there are only 300 commercial bank branches and 634 ATMs—the number of financial institution branches per 1,000 square kilometres in the country has consistently remained below 0.2 in recent years, often more than ten times lower than regional averages.
To complicate matters further, the country operates with two currencies, the Congolese franc and the US dollar, each with its considerations. Local payments in Congolese francs are instant, while dollar payments typically settle within 24 to 72 hours. According to banking law in the DRC, commercial banks are solely responsible for clearing and settlement operations, requiring other participants, such as payments service providers, to obtain sponsorship from a commercial bank to operate.
Hybrid financial companies that offer mobile money accounts can collect deposits but are not classified as banks. These institutions use mobile money as a deposit instrument but cannot issue credit or make payments directly unless they have a provider, or a direct connection with a bank.
Over the past decade however, the DRC has begun to modernise its financial system which, together with 5.7% economic growth in 2021 – due mainly to the strength of its mining sector – presents great new opportunities for businesses expanding across, or entering, the country.
Making the DRC system work for you
Success in the DRC, and Africa in general, is best achieved through partnerships with local organisations that understand the intricacies of the African payment ecosystem. It goes beyond facilitating payments between parties; it requires a comprehension of regulations and their implementation, which can be transparent or ambiguous depending on the country.
The tech ecosystem in the DRC is largely underdeveloped, meaning that there is opportunity for fintech payment companies with innovate solutions to drive inclusion. MFS Africa, which has a dedicated team based in Kinshasa, offers innovative solutions by combining different licenses to cater to banks, mobile network operators, and enterprises. In the DRC, MFS Africa has developed a solution that enables users without a bank account to have a payment instrument in the form of a Visa card, facilitating fund receipt and payments.
The DRC’s payments landscape is predominantly dominated by banks, with regulated aspects of payment services, money transfer, banking, and microfinance. Cross-border payments through mobile money are treated as another use case rather than requiring a specific license. However, each instance requires authorisation from the central bank, creating a barrier to entry and growth for start-ups and smaller businesses.
MFS Africa overcomes these challenges by leveraging its aggregation service license, which allows it to legally aggregate any entity, licensed or not, to operate in the country. This license even permits remittances with companies like WorldRemit, MoneyGram, and Mama Money, which are not registered in the DRC.
MFS Africa connects 500 million mobile wallets across 40 African markets and operates in 800 payment corridors, making cross-border payments seamless and remittances widespread. If you are a payments player seeking access to Africa, specifically the DRC, partnering with MFS Africa is a compelling option.
About MFS Africa
At MFS Africa, we believe that making a payment should be as easy as making a phone call. We believe that access is the currency with which Africans can overcome barriers and injustice and render borders insignificant. We give our partners access to a borderless world of opportunities, connecting enterprises, mobile money operators, money transfer operators, banks, non-bank financial institutions, and online and offline merchants to each other and to more than 500 million mobile money wallets, 200 million bank wallets, 35+ African countries; and 300 000 agents in Nigeria. We enable domestic and cross-border disbursements and collections across our network of networks and work closely with all our partners across the globe to make borders matter less. Recently acquired by MFS Africa, GTP is the number one processor for prepaid cards in Africa with expertise that enable us to extend our value proposition of last-mile connectivity to African banks and to accelerate our offering of card connectivity to mobile money users and other fintech companies operating across the continent.