JOHANNESBURG / STOCKHOLM, Oct. 15 (Reuters) – Africa, with its internationally recognized musical talents – and growing use of the mobile phone – is at the heart of Swedish music streamer Spotify (SPOT.N) plans to expand its reach to a billion customers.
While African artists such as Burna Boy from Nigeria and Black Coffee from South Africa are shown around the world, the continent was seen as an obvious choice and is home to more than a third of the company’s 85 new markets.
The problem is paying on a continent where a lot of people are more likely to have a cell phone than a bank account.
This means that Spotify’s first task as it implements a plan announced in February to almost double its footprint is to win over telecom companies which are often equated with banks.
Phiona Okumu, Spotify’s music manager for Sub-Saharan Africa, told Reuters the company secured “alternative payment methods”, namely M-Pesa, when it moved to Kenya in February.
Owned by Kenya’s largest telecommunications operator, Safaricom (SCOM.NR), M-Pesa is used to send money, save, borrow, and make payments for goods and services.
âA lot of African countries are unbanked which means they don’t use credit cards and this is very true for a lot of (countries) in East Africa and Kenya you use M- Pesa for the most part, âOkumu said.
Elsewhere in Africa, Spotify is looking for other collaborators.
“We are having conversations with the right partners to make sure we are providing solutions to the payment issues facing several African consumers in different parts of the continent,” Okumu said.
HUNTING FOR MOBILE MONEY
Kenya-based Spotify premium user Irene Kophen said she prefers M-Pesa over bank cards because she believes mobile money has made music more accessible.
“Most of us have access to our phones, but few of us have cards or bank accounts,” the 31-year-old told Reuters.
Costs associated with opening bank accounts, distance from financial institutions, and difficulty meeting “Know Your Customers” requirements due to insufficient proof of address added to the appeal of using the phone to pay.
âIn recent years, the focus has been on expanding innovative banking services through mobile technology to capture low-income segments and the unbanked,â a spokesperson for the South African bank said. Absa (ABGJ.J) in a press release sent by email.
In 2020, sub-Saharan Africa had 548 million mobile money accounts, up 12% from 2019 – more than any other region in the world, said mobile industry body GSMA.
This provided banking access in a continent where about 43% of sub-Saharan Africans over the age of 15 had a bank account in 2017, according to the World Bank, which did not provide more recent data.
Spotify’s local competitors, such as Mdundo (MDUNDO.CO) and Boomplay, based in Kenya and listed in Denmark, and Boomplay, headquartered in Nigeria, have also started forging links with mobile operators.
Such partnerships rely on telecommunications providers selling music packages that give customers access to a streaming company’s premium service and exclusively selected music mixes.
Collaboration can benefit both parties by increasing revenue and helping to grow subscribers, but for streaming companies it’s anything but essential.
âIt is essential that streaming companies get it right, otherwise they will lose the revenues of consumers who were willing, but unable, to pay them,â said Charles Stuart, PwC partner and chief technology, media and communications officer. telecommunications.
For telecommunications companies, which also include Airtel Nigeria (AAF.L) and Vodacom Tanzania (VODA.TZ), the partnership can help retain customers by adding value, said Stuart.
MTN (MTNJ.J), Africa’s largest mobile operator with 48.9 million active mobile money users, integrates its mobile money service with its MusicTime app to enable payments, Serigne told Reuters Dioum, digital and fintech manager of the MTN group.
âWe are talking to players who are only music players and we are also talking to players who have a broader reach in music, video and games and who can better position our digital services,â said Dioum of MTN .
Boomplay, which has 60 million monthly active users, has enabled users to pay through mobile platforms such as M-Pesa and Tigo-Pesa in Kenya and Tanzania.
It aims to roll out this option in French-speaking countries, Tosin Sorinola, director of artist and media relations at Boomplay, told Reuters.
Mdundo, which had 8.7 million monthly active users in June, has three telecommunications partnerships in Nigeria and Tanzania, and expects one or two more similar deals before the end of this year, told Reuters Managing Director Martin Nielsen.
âWhen it comes to payments across Africa, our main goal is to bring telecom operators togetherâ¦ because it is the telecom operators who have this reach and access to people’s pockets,â he said. .
Reporting by Nqobile Dludla in Johannesburg and Supantha Mukherjee in Stockholm; edited by Barbara Lewis
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