Martin Ruda, Managing Director, The TALL Group of Companies

As the world changes its perception of emerging markets beyond the now well-documented BRICS success stories, other regions such as sub-Saharan Africa come into focus and offer potential growth opportunities. So what challenges does the payments community face not only in terms of applications and processes, but also operating in these countries and regions?


The IMF’s ‘World Economic Outlook’ indicators identify Emerging Market and Developing Country GDP growth rates well in excess of 5% over the next 2-3 years, at a time when the US is forecasting 3% and Europe 1%. Therefore, there are considerable opportunities to deliver effective and secure payment solutions that will support this growth and contribute to the local banking infrastructure.

In sub-Sahara Africa (excluding South Africa), where typically less than a quarter of adult populations maintain a bank account, the challenges and opportunities for payments innovation and implementation come in equal measure. The well-known success of the M-PESA mobile payment system in Kenya has yet to find comparable penetration elsewhere, as local conditions vary immensely from country to country, but in recent years the service has been rolled-out in other countries such as Tanzania and South Africa with varying degrees of uptake.


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M-PESA is currently the most developed mobile payment system in the world, allowing users with a national ID card or passport to deposit, withdraw and transfer money easily using a mobile device. With about 17 million M-Pesa accounts registered in Kenya, M-PESA is a great example of a payment solution that has been developed to address local challenges and needs, but it should also act as a warning that a “one size fits all” approach is not necessarily the way when targeting emerging markets.

Cash and cheques continue to be the principal instruments although electronic, card and mobile are all accelerating. Barclays recently suggested that a ‘Pan-African approach for money transmission architecture’ was an achievable priority for them and may be established as a model for the future. Elsewhere, interesting work is being undertaken in the mobile space and ‘host to host’ services for corporate payments processing.

Meanwhile, as cheque truncation takes hold in Nigeria and Zambia, two of the fastest growing economies in the region, the potential to dramatically speed up clearing cycles through the use of cheque image processing is becoming a reality. This fusion of traditional payments methods and the application of proven, value-adding technology is typical of the transition that is taking place in emerging markets, where customer preference and continuous improvement are key drivers that can co-exist. There are certainly lessons to be learnt here, even for the ‘old’ economies and their payments environments.


Within emerging markets, especially sub-Sahara Africa, the challenge for service providers is not simply about having the appropriate payment products and services because there are many other considerations to overcome in terms of networking, movement, tender and bidding processes, health and safety and finance.

What cannot be understated is the importance of local connections when operating within such markets. Having an in-country partner is essential, but finding the right organisation for the role can only be achieved through hard work and due diligence.

Everyone will tell you they are connected and a specialist, so it is important not take everything at face value and ensure you are not drawn into any inappropriate relationships. However, within these countries and regions personal trust is critical for all business transactions, which adds significant pressure on setting up relationships and getting it right first time.

Differences in the bidding process and general business etiquette must also be considered when operating in emerging markets. It is not unheard of to be kept waiting for a pre-arranged meeting for several hours, whilst last minute changes and adjustments to requirements and deadlines do frequently occur.

There is also the banking challenge of setting up bid bonds to guarantee participation in a bidding process. These need to be established in the UK and then endorsed by a local bank, often at very short notice, so can be very complex procedures. The lack of a pan-African presence by multinational banking organisations can mean a lack of consistency and common services that is hampering business growth within the region.

The banking sector is undergoing considerable growth within emerging markets and with this comes a need for effective and secure payment solutions. However, there is a definite need to take a measured approach that takes into consideration local conditions and cultures to make the most of the growth opportunities that exist.