Market Opportunities and Emerging Trends in the Prepaid ...

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Market Opportunities and

Emerging Trends in the Prepaid

Card Market in Sub-Saharan

Africa

Industry Forecast Report

Reference code: IS0207MR

Published: June 2012

BRICdata

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London EC4Y 0BS

United Kingdom

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EXECUTIVE SUMMARY

Market Opportunities and Emerging Trends in the Prepaid Card Market in Sub-Saharan Africa Page 2

© BRICdata. This product is licensed and is not to be photocopied Published: June 2012

1 Executive Summary

South Africa

Market size

The South African prepaid cards market valued ZARXX.X billion in 2011 and this is expected to grow at a CAGR

of XX.XX% over the forecast period to value ZAR3XX.X billion by 2016. Such growth can be attributed to the

projected social protection expenditure by the South African National Treasury, which is expected to pay wages

to millions of South African through prepaid cards over the forecast period. The country’s robust banking sector

growth and demand for prepaid cards among younger consumers is anticipated to drive growth in the prepaid

cards market over the forecast period.

Trends and growth drivers

The prepaid cards market has slowly gained popularity in South Africa, as the organized retailers and vendors

began to accept prepaid cards, with no processing fee. Furthermore, hoteliers and vehicle rental vendors have

also started to accept prepaid cards for their service transactions.

Technology development has been a key factor in the growth of the financial cards industry in South Africa.

During the review period (2007–2011), a number of technologies have been implemented. For example, mini-

ATMs were introduced by First National Bank, while mobile ATMs and wireless point of sale (POS) terminals

have been unveiled by other banks. The arrival of GPRS and Edge technologies has further motivated rural

consumers to perform more cashless transactions due to their ability to transfer of money through mobile and

prepaid cards platforms.

Convenience will be the most important driver of the adoption of prepaid cards in South Africa. Demand from younger consumers is expected to play a vital role in the growth of the prepaid cards market over the forecast period.

Challenges

In South Africa, financial cards are not very popular in many rural areas due to a lack of technological

infrastructure and a poor response, in terms of the uptake of such technology, by merchants and vendors. Street

vendors and merchants often prefer cash transactions, as the card processing fees applied to each transaction

by banks reduces their profit margin. This lack of technological acceptance in rural areas poses a challenge for

the prepaid cards market.

Competitive landscape

The South African Banking sector is consolidated with four large profitable banks, which are: ABSA Bank, First

National Bank of South Africa (FNB), Nedbank and Standard Bank. These banks accounted for over XX% of the

retail banking market in 2011. Standard Bank is the market leader in terms of total assets and prepaid cards

sales. The bank registered ZARXXX million prepaid cards sales in 2011.

There are multiple domestic and overseas banks with operations in South Africa. Domestic banks, such as

Bidvest Bank Limited, Capitec Bank Limited, FirstRand Bank Limited, Grindrod Bank Limited, Imperial Bank

Limited and Investec Bank Limited, have played a significant role in the South African banking context, while

overseas banks, such as Albaraka Bank Limited, Habib Overseas Bank Limited, HBZ Bank Limited and Islamic

Bank Limited, have strong market presences. These banks, in association with local merchants, sell a variety of

prepaid cards, which include gift, payroll, travel, insurance and incentive cards.

EXECUTIVE SUMMARY



Nigeria

Market size

The Nigerian prepaid cards market valued NGNX.X billion in 2011 and this is expected to grow at a CAGR of XX.XX% over the forecast period to reach NGNXX.X billion by 2016. Such rapid growth can be attributed to the Nigerian government’s vision to make the country a cashless-economy.

Trends and drivers

Simple eligibility criteria established by Nigerian banks is expected to support the sales of prepaid cards. As the

majority of Nigerians do not have a bank account, Nigerian banks have established simple eligibility criteria so

that more people can easily benefit from prepaid cards. All a customer has to do is fill in an application form,

provide a photo, valid proof of identity and address, and pay the required fee. This simple eligibility criterion has

been a principal growth driver of prepaid cards sales in Nigeria.

The Central Bank of Nigeria has implemented a new policy in Lagos to reduce the amount of physical cash such

as notes and coins in rotation in the economy, while encouraging electronic-based transactions for the payment

of goods and services. According to the new policy, a cash handling charge will be levied on daily cash deposits

or cash withdrawals that exceed NGNXXX,XXX for individuals, and NGNX,XXX,XXX for corporate bodies. This

move is expected to support the demand for prepaid cards in Nigeria.

Nigeria has gradually transformed itself towards progressive payment systems. Although cash and checks still

remain popular payment systems, electronic payment systems too have gradually gained popularity. All forms of

electronic transaction modes available globally are available in Nigeria, but differ significantly in terms of

infrastructure and their level of use.

Challenges

A lack of technological infrastructure is a major challenge to the Nigerian banking industry. Factors such as the

number of ATMs available, the limited use of POS terminals and lack of internet penetration have hindered the

growth of the banking industry and have influenced the prepaid cards market. POS usage is low and is used in

select places such as, popular restaurants and large malls, while problems relating to frequent power cuts render

ATMs non-functional in rural areas.

Aside from other challenges such as, illiteracy, irregular incomes, unemployment and a limited number of banks

for people residing in rural areas, unawareness is another major challenge for the Nigerian prepaid cards

industry.


The Nigerian prepaid cards market is small in size. The prepaid cards business is still in its early stages of

development and therefore, competition is not intense. All the major banks have entered the market, but this

does not constitute a major part of their product portfolios. United Bank for Africa Plc, Intercontinental Bank Plc,

Zenith Bank Plc, Guaranty Trust Bank Plc and First Bank of Nigeria Plc are the leading banks functional in this

market.

EXECUTIVE SUMMARY



Kenya

Market size

Kenya’s prepaid cards market valued KESXXX.X million in 2011, which is expected to value KESXXX.X million

by 2016, after recording a CAGR of -X.XX% over the forecast period. The negative growth is mainly due to the

increasing popularity of mobile payment services and a lack of technological infrastructure.

Trends and growth drivers

During the review period, mobile payment services were the preferred form of payment in Kenya. The country’s

mobile payment market is largely controlled by the top mobile payment service provider, M-Pesa. However, the

prepaid cards market is in its early stages of development and provides strong growth potential for new market

entrants. A number of banks, including Kenya Commercial Bank, Investment and Mortgages Bank and Bank of

Africa have begun to offer prepaid cards.

The number of internet users more than doubled in 2011, from X million in 2010 to X.X million in 2011. The

Kenyan government’s recent investment in fiber-optic cables is expected to increase the number of internet

users, which will have a positive impact on the internet banking market over the forecast period.

Challenges

Kenya’s payment system market is overcrowded, with many mobile payment service providers such as, M-Pesa.

Structurally, the market is highly fragmented which has created entry barriers for new companies that desire to

enter the Kenyan prepaid card market. However, the high demand for prepaid cards among younger consumers

is expected to support the prepaid cards market, despite tough competition from mobile payment service

providers.


The Kenyan banking industry is concentrated with 44 commercial banks and one mortgage finance institution.

These banks have started to offer a variety of products. However, there are only a few banks, Kenya Commercial

Bank, Investment and Mortgages Bank, Bank of Africa and Chase Bank that offered prepaid cards during the

review period.

EXECUTIVE SUMMARY



Other Sub-Saharan countries

The prepaid cards markets in other Sub-Saharan countries such as Tanzania, Mozambique, Zambia and Botswana are in

their early stages of development and only a few companies have entered the respective markets. The prepaid cards

market in Tanzania is more developed than that of Mozambique, Zambia and Botswana, however, younger consumers are

expected to support further growth over the forecast period.

Trends and drivers

Leading banks in other Sub-Saharan countries are forming alliances with co-operating societies to offer prepaid

cards to their members. For example, Tanzania’s CRDB bank entered into an alliance with Savings and Credit

Cooperative Societies (SACCOs) to provide prepaid cards to its members

Frequent traveler and employee wage disbursement were identified as the key target markets for prepaid card

providers in other Sub-Saharan countries, especially in Tanzania. For example, Tanzania’s CRDB Bank unveiled

its travel card TANAPA Tembo and predominantly targeted frequent travelers

Stable economic growth is expected to improve the confidence of both local and international banks operating in

these countries, which in turn, is expected drive the growth of prepaid card markets. Furthermore, the purchasing

power of the people in these countries grew steadily during the review period, a trend which is expected to

continue over the forecast period. This can be mainly attributed to rising disposable incomes which result in

higher purchasing power for citizens.

TABLE OF CONTENTS



TABLE OF CONTENTS

1 Executive Summary .............................................................................................................................. 2 2 Sub -Saharan Africa Prepaid Cards Market Environment and Benchmarking ............................. 10

2.1 Introduction and Overview of the Sub-Saharan Region ........................................................................ 10

2.1.1 Economic activities and natural resources in Sub-Saharan Africa ........................................................ 10

2.1.2 Recent economic developments: financial resilience ............................................................................ 12

2.1.3 Population of Sub-Saharan Africa: young and growing population despite social issues..................... 12

2.1.4 Millennium development goals: a distinct lack of progress ................................................................... 13

2.2 Payment Systems in Sub-Saharan Africa ............................................................................................. 15

2.3 Macroeconomic Factors ........................................................................................................................ 24

2.4 Technology Infrastructure Factors ......................................................................................................... 25

3 Prepaid Cards Market in South Africa ............................................................................................... 26

3.1 Market Environment .............................................................................................................................. 26

3.1.1 Regulatory framework ........................................................................................................................... 26

3.1.2 Microeconomic indicators ...................................................................................................................... 27

3.1.3 Banking industry structure in South Africa ............................................................................................ 35

3.1.4 Payment system in South Africa ............................................................................................................ 36

3.2 Market Size and Growth Potential ......................................................................................................... 40

3.2.1 South African banking sector market size ............................................................................................. 40

3.2.2 South Africa prepaid cards market size ................................................................................................. 41

3.3 Marketing Strategies Adopted for Selling Prepaid cards ....................................................................... 43

3.4 Competitive Landscape ......................................................................................................................... 44

3.5 Key Trends, Drivers and Challenges for Prepaid cards market in South Africa ................................... 45

3.5.1 Business trends and growth drivers ...................................................................................................... 45

3.5.2 Challenges ............................................................................................................................................. 47

4 Prepaid Cards Market in Nigeria ........................................................................................................ 48




4.1.3 Banking sector structure in Nigeria........................................................................................................ 54

4.1.4 Payment systems in Nigeria .................................................................................................................. 55


4.2.1 Nigerian banking industry market size .................................................................................................. 56

4.2.2 Nigerian prepaid cards market size ....................................................................................................... 57

4.3 Marketing Strategies Adopted for Selling Prepaid Cards ...................................................................... 58


4.5 Key Trends, Growth Drivers and Challenges for Prepaid Cards Market in Nigeria .............................. 60

4.5.1 Business trends and growth drivers ...................................................................................................... 60

4.5.2 Challenges ............................................................................................................................................. 61

5 Prepaid Cards Market in Kenya .......................................................................................................... 62




TABLE OF CONTENTS



5.1.3 Banking sector structure in Kenya ......................................................................................................... 69

5.1.4 Payment system in Kenya ..................................................................................................................... 70


5.2.1 Kenyan banking industry market size .................................................................................................... 75

5.2.2 Kenyan prepaid cards market size ........................................................................................................ 77

5.3 Marketing Strategies Adopted for Selling Prepaid Cards ...................................................................... 78


5.5 Key Trends, Drivers and Challenges for Prepaid Cards Market in Kenya ............................................ 80

5.5.1 Business trends and drivers .................................................................................................................. 80

5.5.2 Challenges ............................................................................................................................................. 82

6 Other Sub-Saharan Markets ............................................................................................................... 83


6.2 Trends and drivers ................................................................................................................................. 83

6.3 Tanzania ................................................................................................................................................ 85

6.3.1 Market environment ............................................................................................................................... 85

6.3.2 Banking industry overview ..................................................................................................................... 85

6.3.3 Macroeconomic indicators ..................................................................................................................... 86

6.4 Mozambique .......................................................................................................................................... 89


6.4.2 Banking sector overview ........................................................................................................................ 89


6.5 Zambia ................................................................................................................................................... 93




6.6 Botswana ............................................................................................................................................... 96




7 Appendix .............................................................................................................................................. 99

7.1 About BRICdata ..................................................................................................................................... 99

7.1.1 Areas of expertise .................................................................................................................................. 99

7.2 Methodology ........................................................................................................................................ 100

7.3 Disclaimer ............................................................................................................................................ 101

TABLE OF CONTENTS



LIST OF FIGURES

Figure 1: Millennium Development Goals Progress Update, 2011 ............................................................................................................. 13 Figure 2: Personal Bank Account Ownership by Sub-Saharan Country (%), 2010 ..................................................................................... 16 Figure 3: Bank Account Ownership by Location, Gender and Age Group (%) ............................................................................................ 17 Figure 4: Key Mobile Payment Operators in Sub-Saharan Africa ............................................................................................................... 18 Figure 5: Number of Customer in Specific Countries.................................................................................................................................. 19 Figure 6: South Africa’s GDP at Constant Prices (ZAR Billion), (Base Year 1999–2000), 2007–2016 ........................................................ 27 Figure 7: South Africa Annual Disposable Income,(ZAR Billion), 2007–2016 ............................................................................................. 28 Figure 8: Inflation Rate (%), 2007–2016 .................................................................................................................................................... 29 Figure 9: Number of Internet Subscribers (Million), 2007–2016 ................................................................................................................. 30 Figure 10: Personal Computers Per 100 People, 2007–2016 .................................................................................................................... 31 Figure 11: Mobile Phone Penetration Rate (%), 2007–2016 ...................................................................................................................... 32 Figure 12:Urban and Rural Population, 2007–2016 ................................................................................................................................... 33 Figure 13: FDI Inflows (ZAR Billion), 2007–2010 ....................................................................................................................................... 34 Figure 14: South Africa’s Internet Penetration Level (%),2007–2010 ......................................................................................................... 36 Figure 15: South Africa’s Payment System Transactions (%), 2010 ........................................................................................................... 37 Figure 16: Future Drivers of Debit Card Adoption in South Africa ............................................................................................................... 38 Figure 17: Challenges to Debit Card Growth .............................................................................................................................................. 38 Figure 18: South Africa’s Total Banking Sector Assets (ZAR Billion), 2008–2010 ...................................................................................... 40 Figure 19: Market Share by Bank Assets, June 2010 ................................................................................................................................ 40 Figure 20: South Africa Prepaid Cards Market Size by Value (ZAR Billion), 2011 vs. 2016 ........................................................................ 41 Figure 21: South Africa Prepaid Cards market by Segment,(%), 2011 ....................................................................................................... 42 Figure 22: Future Drivers of Prepaid Cards Growth in South Africa ........................................................................................................... 46 Figure 23: Challenges to Prepaid Card Growth in South Africa .................................................................................................................. 47 Figure 24: Nigeria’s GDP at Constant Prices (NGN Trillion), (Base Year 1999–2000), 2007–2016 ............................................................ 49 Figure 25: Nigeria’s Annual Disposable Income (NGN Trillion), 2007–2016 ............................................................................................... 50 Figure 26: Inflation Rate (%), 2007–2016 .................................................................................................................................................. 51 Figure 27: Mobile Phone Penetration Rate (%), 2007–2016 ...................................................................................................................... 52 Figure 28: Urban and Rural Population, 2007–2016 .................................................................................................................................. 53 Figure 29: Nigeria FDI Inflow,(NGN Billion), 2007–2010 ............................................................................................................................ 53 Figure 30: Electronic Card-Based Transactions by Volume, 2010 .............................................................................................................. 55 Figure 31: Nigerian Commercial Banks’ Assets,(NGN Trillion), 2007–2011 ............................................................................................... 56 Figure 32: Nigerian Prepaid Cards Market Size, (NGN Billion), 2011 vs. 2016 ........................................................................................... 57 Figure 33: Kenya’s GDP at Constant Prices (KES Billion), (Base Year 1999–2000), 2007–2016 ............................................................... 63 Figure 34: Kenya’s Annual Disposable Income, (KES Billion), 2007–2016 ................................................................................................. 64 Figure 35: Inflation Rate (%), 2007–2016 .................................................................................................................................................. 65 Figure 36: Kenya’s Mobile Phone Penetration Rate (%), 2007–2016 ......................................................................................................... 66 Figure 37:Kenya’s Urban and Rural Population, 2007–2016 ...................................................................................................................... 67 Figure 38: Kenya’s FDI Inflows (KES Billion), 2007–2010 .......................................................................................................................... 68 Figure 39: Kenya’s Banking Industry Structure, December 2010 ............................................................................................................... 69 Figure 40: Kenya’s Banking Industry Structure, Ownership vs. Assets, December 2010 ............................................................................ 69 Figure 41: Kenya’s Internet Penetration Levels,(%), 2007–2011 ................................................................................................................ 70 Figure 42: Kenya’s Market Share of Financial Cards (%), 2009 vs. 2010 ................................................................................................... 71 Figure 43: Future Drivers Of Debit Card Adoption in Kenya ....................................................................................................................... 71 Figure 44: Key Challenges of Debit Card in Kenya .................................................................................................................................... 72 Figure 45: Kenya Mobile Penetration Rate (%), 2007–2016 ....................................................................................................................... 73 Figure 46: Kenya’s Financial Cards by Volume, 2007–2011 ...................................................................................................................... 74 Figure 47: Kenya’s Banking Industry Total Assets (KES Million), as of December 2010 ............................................................................ 75 Figure 48: Kenya’s Banking Sector’s Market Shares, as of December 2010 .............................................................................................. 76 Figure 49: Kenyan Prepaid Cards Market Size by Value (KES Million), 2011 vs 2016 ............................................................................... 77 Figure 50: Future Drivers of Prepaid Cards Growth in Kenya ..................................................................................................................... 81 Figure 51: Key Challenges to Prepaid Card Growth In Kenya .................................................................................................................... 82 Figure 52:Tanzania’s GDP at Constant Prices (TZS Trillion), (Base Year 1999–2000), 2007–2016 ........................................................... 86 Figure 53: Tanzania’s Annual Disposable Income,(TZS Trillion), 2007–2016 ............................................................................................. 87 Figure 54: Inflation Rate (%), 2007–2016 .................................................................................................................................................. 88 Figure 55: Mozambique’s GDP at Constant Prices (MZM Billion), (Base Year 1999–2000), 2007–2016 .................................................... 90 Figure 56: Mozambique’s Annual Disposable Income,(MZM Billion), 2007–2016 ....................................................................................... 91 Figure 57: Inflation Rate (%), 2007–2016 .................................................................................................................................................. 92 Figure 58: Zambia’s GDP at Constant Prices (ZMK Trillion), (Base Year 1999–2000), 2007–2016 ............................................................ 94 Figure 59: Inflation Rate (%), 2007–2016 .................................................................................................................................................. 95 Figure 60: Botswana’s GDP at Constant Prices (BWP Billion), (Base Year 1999–2000), 2007–2016 ........................................................ 97 Figure 61: Inflation Rate (%), 2007–2016 .................................................................................................................................................. 98

TABLE OF CONTENTS



LIST OF TABLES

Table 1: Categorization of Sub-Saharan Africa by resources ..................................................................................................................... 10 Table 2: Membership of Economic Organizations in Sub-Saharan Africa ................................................................................................... 11 Table 3: Ibrahim Index Indicators for Sub-Saharan African Countries, 2010 .............................................................................................. 14 Table 4: World Bank Assessment of the Ease of doing Business in Sub-Saharan Africa, June 2011 ......................................................... 14 Table 5: Personal Bank Account Ownership by Sub-Saharan Country (%), 2010 ...................................................................................... 16 Table 6: Next Strategic Move for Key Mobile Operators ............................................................................................................................ 19 Table 7: Strategic Partners (Specify Financial Services , Retail, IT) ........................................................................................................... 20 Table 8: Brief Description of IT Platform and Compatibility with Other Platforms........................................................................................ 21 Table 9: Awareness of Microfinance Providers by Country ........................................................................................................................ 22 Table 10: Dependence on Community Savings Schemes in Sub-Saharan Africa (%) ................................................................................ 23 Table 11: Sub-Saharan Countries’ Macroeconomic Conditions, 2011 ........................................................................................................ 24 Table 12: Penetration Levels in Key Sub-Saharan Countries ..................................................................................................................... 25 Table 13: South Africa’s GDP at Constant Prices (ZAR Billion), (Base Year 1999–2000), 2007–2016 ....................................................... 27 Table 14: South Africa Annual Disposable Income,(ZAR Billion), 2007–2016 ............................................................................................ 28 Table 15: Inflation Rate (%), 2007–2016 .................................................................................................................................................... 29 Table 16: Number of Internet Subscribers (Million), 2007–2016 ................................................................................................................. 30 Table 17: Personal Computers Per 100 People, 2007–2016 ...................................................................................................................... 31 Table 18: Mobile Phone Penetration Rate (%), 2007–2016........................................................................................................................ 32 Table 19: Various Types of Credit Cards in South Africa ........................................................................................................................... 39 Table 20: Nigeria’s GDP at Constant Prices (NGN Trillion), (Base Year 1999–2000), 2007–2016 ............................................................. 49 Table 21: Nigeria’s Annual Disposable Income (NGN Trillion), 2007–2016 ................................................................................................ 50 Table 22: Inflation Rate (%), 2007–2016 .................................................................................................................................................... 51 Table 23: Mobile Phone Penetration Rate (%), 2007–2016........................................................................................................................ 52 Table 24: Types of Commercial Banks on the Basis of Minimum Capital Requirements,(NGN Billion) ....................................................... 54 Table 25: Minimum Capital Requirements of Various Types of Specialized Banks, (NGN Billion) .............................................................. 54 Table 26: Nigerian Commercial Bank’s Assets,(NGN Trillion), 2007–2011................................................................................................. 56 Table 27: Kenya’s GDP at Constant Prices (KES Billion), (Base Year 1999–2000), 2007–2016 ................................................................ 63 Table 28: Kenya’s Annual Disposable Income, (KES Billion), 2007–2016 .................................................................................................. 64 Table 29: Inflation Rate (%), 2007–2016 .................................................................................................................................................... 65 Table 30: Kenya’s Mobile Phone Penetration Rate (%), 2007–2016 .......................................................................................................... 66 Table 31: Tanzania’s GDP at Constant Prices (TZS Trillion), (Base Year 1999–2000), 2007–2016 ........................................................... 86 Table 32: Tanzania’s Annual Disposable Income,(TZS Trillion), 2007–2016 .............................................................................................. 87 Table 33: Inflation Rate (%), 2007–2016 .................................................................................................................................................... 88 Table 34: Mozambique’s GDP at Constant Prices (MZM Billion), (Base Year 1999–2000), 2007–2016 ..................................................... 90 Table 35: Mozambique’s Annual Disposable Income,(MZM Billion), 2007–2016 ........................................................................................ 91 Table 36: Inflation Rate (%), 2007–2016 .................................................................................................................................................... 92 Table 37: Zambia’s GDP at Constant Prices (ZMK Trillion), (Base Year 1999–2000), 2007–2016 ............................................................. 94 Table 38: Inflation Rate (%), 2007–2016 .................................................................................................................................................... 95 Table 39: Botswana’s GDP at Constant Prices (BWP Billion), (Base Year 1999–2000), 2007–2016 .......................................................... 97 Table 40: Inflation Rate (%), 2007–2016 .................................................................................................................................................... 98

PREPAID MARKET IN SOUTH AFRICA



2 Sub -Saharan Africa Prepaid Cards Market Environment and Benchmarking

2.1 Introduction and Overview of the Sub-Saharan Region

Despite political, economic and social problems, the Sub-Saharan region represents an interesting prospect for financial

services institutions. It is characterized by a young and growing population, fast adoption of mobile phone technology, a

largely unbanked population and an economy that is growing at a healthy rate. This region is attracting increasing interest

from global financial services organizations. The countries covered in this report are South Africa, Nigeria, Kenya and

other Sub-Saharan countries including Tanzania, Mozambique, Zambia and Botswana.

Table 5: Personal Bank Account Ownership by Sub-Saharan Country (%), 2010

Country Total Personal Bank Account Holders (%)

South Africa XX

Kenya XX

Zimbabwe XX

Nigeria XX

Uganda XX

Ghana XX

Rwanda XX

Tanzania XX

Malawi XX

Zambia X

Cameroon X

Chad X

Ivory Coast X

Senegal X

Burundi X

Mali X

Congo X

Niger X

Source: Gallup poll and BRICdata analysis © BRICdata

Figure 2: Personal Bank Account Ownership by Sub-Saharan Country (%), 2010

Source: Gallup poll and BRICdata analysis © BRICdata

PREPAID MARKET IN SOUTH AFRICA



3 Prepaid Cards Market in South Africa

This chapter discusses the insights into South Africa’s prepaid cards market. The chapter comprises three sections, which

cover different aspects of the market. The first section provides a brief overview of market conditions, with specific focus

on macroeconomic indicators, payment systems, regulatory framework, end-user trends and challenges. The second

section offers detailed insights into the market size and the growth potential of the banking industry. While the final section

discusses the competitive landscape and popular market entry strategies for selling prepaid cards in South Africa.

3.1.1 Microeconomic indicators

GDP growth

South Africa’s GDP at constant prices valued at ZARX.X trillion in 2011, after having recorded a CAGR of X.XX% during

the review period. The country’s GDP is projected to grow at a CAGR of X.XX% over the forecast period, to reach ZARX.X

trillion by 2016. South Africa’s strong economic growth is being supported by the country’s improved business

environment and performance of the financial sector, which are expected to support growth in the prepaid cards market

over the forecast period.

The following table and figure summarizes the GDP at constant prices in South Africa, 2007–2016:

Table 13: South Africa’s GDP at Constant Prices (ZAR Billion), (Base Year 1999–2000), 2007–2016

2007 2008 2009 2010 2011

GDP X,XXX.X X,XXX.X X,XXX.X X,XXX.X X,XXX.X

X012 2013 2014 2015 2016

GDP X,XXX.X X,XXX.X X,XXX.X X,XXX.X X,XXX.X

Source: International Monetary Fund and BRICdata analysis © BRICdata

Figure 6: South Africa’s GDP at Constant Prices (ZAR Billion), (Base Year 1999–2000), 2007–2016


PREPAID MARKET IN NIGERIA



4 Prepaid Cards Market in Nigeria

Inflation rate

Despite impressive economic growth, Nigeria registered high rates of inflation during the review period, which rose from

X.X% in 2007 to XX.X% in 2011. This is projected to consolidate at X.X% by 2016. Inflation grew rapidly during 2010–

2011, due to an increase in fuel prices. However, inflation is expected to stabilize over the forecast period.

The following table and figure depicts Nigerian inflation rate, 2007–2016:

Table 22: Inflation Rate (%), 2007–2016

2007 2008 2009 2010 2011

Inflation X.X% XX.X% XX.X% XX.X% XX.X%

2012 2013 2014 2015 2016

Inflation X.X% X.X% X.X% X.X% X.X%

Source: BRICdata analysis © BRICdata

Figure 26: Inflation Rate (%), 2007–2016


APPENDIX



5 Prepaid Cards Market in Kenya

This section discusses the various macroeconomic indicators expected to impact the prepaid cards market, its regulatory

framework and the key business trends and challenges with regards to companies operating in Kenya. Furthermore, it

discusses the country’s payment system and banking sector performance.

5.1.1 Microeconomic indicators

Mobile phone penetration rate

Kenya’s mobile phone penetration rate grew from XX.X% in 2007 to XX.X% in 2011, and is expected to reach 1XX.X% by

2016. The growing mobile phone penetration rate will be the key growth factor of mobile banking, which is expected to

benefit the prepaid cards market over the forecast period.

The following table and figure summarizes the mobile phone penetration level in Kenya, 2007–2016:

Table 30: Kenya’s Mobile Phone Penetration Rate (%), 2007–2016

2007 2008 2009 2010 2011

Mobile Phone

Penetration XX.X% XX.X% XX.X% XX.X% XX.X%

2012 2013 2014 2015 2016

Mobile Phone

Penetration XX.X% XX.X% 1XX.X% 1XX.X% 1XX.X%


Figure 36: Kenya’s Mobile Phone Penetration Rate (%), 2007–2016


APPENDIX



6 Other Sub-Saharan Markets

6.1 Market Environment

The other Sub-Saharan market for debit and prepaid cards is under-developed. Less than one-fifth of the total population

in the regions have a personal bank account due to a lack of money to deposit and a lack of government support to

develop an infrastructure that facilitates debit and prepaid cards. However, mobile phone ownership is much more

widespread, with over one-third owning a mobile phone, even those on minimal wages. Safaricom and Vodafone have

capitalized on the fast adoption of mobile communication technology through the introduction of their M-Pesa mobile

payments service, which enables users to make person-to-person and person-to-business payments using their mobile

device. M-Pesa has a customer base of over 4 million users in Tanzania and is exploring opportunities in other Sub-

Saharan countries.

Furthermore, the prepaid cards market in other Sub-Saharan countries including Tanzania, Mozambique, Zambia and

Botswana is still in its early stage of growth and only a few companies have entered into this business in these regions.

Tanzania’s prepaid cards market is in its developmental stages of growth, while other Sub Saharan countries’ including

Mozambique, Zambia and Botswana are in their introductory stages. However, the growing interest of younger consumer

and the unpopularity of credit cards in these countries are expected to support the prepaid cards market in other Sub-

Saharan countries over the forecast period.

APPENDIX



6.2 Tanzania

6.2.1 Market environment

With a population of XX million, of which XX% is unbanked, Tanzania represents an interesting prospect for financial

service providers. The majority of the population lives rurally and without access to a physical banking network, an

opportunity that has been recognized by Safaricom and Vodafone with the launch of mobile payments operator M-Pesa in

2007. Since its launch, the service has attracted four million customers in Tanzania, providing the population with a low-

cost alternative to cash payments.

6.2.2 Macroeconomic indicators

GDP growth

Tanzania’s GDP at constant prices valued TZSXX.X trillion in 2011, recording a CAGR of X.XX% during the review period.

The country’s GDP is projected to grow at a CAGR of X.XX% over the forecast period, to reach TZSXX.X trillion by 2016.

The increased economic trend is expected to support the financial sector, which is expected to have a positive influence

on the financial cards market.

The following table and figure depicts the GDP at constant prices in Tanzania, 2007–2016:

Table 31: Tanzania’s GDP at Constant Prices (TZS Trillion), (Base Year 1999–2000), 2007–2016

2007 2008 2009 2010 2011

GDP XX.XX XX.XX XX.XX XX.XX XX.XX

2012 2013 2014 2015 2016

GDP XX.XX XX.XX XX.XX XX.XX XX.XX


Figure 52:Tanzania’s GDP at Constant Prices (TZS Trillion), (Base Year 1999–2000), 2007–2016


APPENDIX



7 Appendix

7.1 About BRICdata

BRICdata publishes in-depth strategic intelligence reports that help its customers better understand opportunities in

emerging markets and industry sectors. Its reports provide an independent, expert view supported by primary research

and access to leading data and intelligence sources.

BRICdata is a comprehensive source of insights and analysis, and publishes a broad range of reports across a number of

different industry sectors, including consumer, retail, financial services, technology, telecoms and construction.

BRICdata is headquartered in London with research, analysis and account management teams based across Europe, the

US and Asia-Pacific. Its global research footprint is supported by a network of external associates, data partners and

industry experts to give the clearest possible perspective on emerging markets.

7.1.1 Areas of expertise

BRICdata operates a dedicated, multilingual team of in-house industry analysts with significant experience of global and

country-level research. BRICdata also maintains data and research partnerships with other research companies, industry

experts and trade associations, along with a network of independent industry consultants and former industry participants

contributing research and reports to bring additional insight and expertise in more specialist areas.

BRICdata’s research offering spans the following industry areas:

Construction

BRICdata publishes reports covering the entire construction value chain: construction materials, equipment, construction

services, architectural services and interior design. It also covers the main value sectors of construction activity:

commercial, infrastructure, industrial, institutional and residential.

This comprehensive view of the market enables BRICdata to detail key growth sectors and countries and identify the most

attractive industry opportunities.

Consumer goods

Covering a broad range of areas across the consumer goods market, from interior products to fast-moving consumer

goods (FMCG), ingredients, and packaging, BRICdata offers a comprehensive insight into key consumer sectors across

fast-growing markets, identifying key trends, future innovations and growth opportunities.

Comprehensive data sets including unique primary survey-driven research creates accurate market forecasts and

understanding of the factors driving consumption behavior.

Financial services Providing detailed insights into insurance and banking markets, BRICdata’s financial services reports identify key market

opportunities, emerging technologies and channel strategies. The reports provide unique data combined with local

examples of best practice and expert insights into the market.

Retail BRICdata maintains a comprehensive database of forecasts of retail spending, along with a series of unique indicators

enabling a forward view of retailers’ prospects in emerging markets. The reports identify emerging concepts in retail,

including the nascent online and mobile retail sectors in the BRIC countries and other emerging markets.

Technology

BRICdata tracks key trends and innovations, emerging technologies and markets, and the key operators in both emerging

markets and technologies. Covering a range of emerging and disruptive technologies including telecoms, social media,

online and mobile retailing, and telemedicine, BRICdata examines strategies for success, the state of the competitive

landscape and the inherent threats and opportunities in the emerging technological economy.

APPENDIX



7.2 Methodology

All BRICdata reports are rigorously sourced and created according to a comprehensive, two-stage methodology. This

includes internal audit and primary research.

A) Internal audit

Review of in-house databases to gather existing data:

o Historic market databases and reports

o Company database

o projects database

B) Primary research

Review of the latest company strategy and asset management trends

1) Research

A. Sources

Collection of the latest market-specific data from a wide variety of industry sources:

o Government statistics

o Industry associations

o Company filings

o Broker reports

o International organizations

B. Expert opinion

Collation of opinion taken from leading industry experts

Analysis of third-party opinion and forecasts:

o Broker reports

o Industry associations

o Official government sources

C. Data consolidation and verification

Consolidation of data and opinion to create historical datasets

Creation of models to benchmark data across sectors and geographies

2) Research Analysis

Market forecasts

Feed of forecast data into market models:

o Macroeconomic indicators

o Industry-specific drivers

Analysis of Market Databases to identify trends by sector:

o Latest trends

o Key drivers of the market

3) Report Writing

Analysis of market data

Discussion of company and industry trends and issues

Integration of survey results

Annual review of trends

Standardization of market definitions using recognized industry classifications

4) Quality Control

A. Templates

Detailed process manuals

Standardized report templates and accompanying style guides

Complex forecasting tool used to ensure forecast methodologies are consistently applied

QC checklists

B. QC process

Peer review

Senior-level QC

Random spot checks on data integrity

Benchmark checks across databases

APPENDIX



Market data cross-checked for consistency with accumulated data from company filings

7.3 Disclaimer

All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means,

electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, BRICdata.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the

findings, conclusions and recommendations that BRICdata delivers will be based on information gathered in good faith

from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. BRICdata can,

therefore, accept no liability whatsoever for actions taken based on any information that may subsequently prove to be

incorrect.

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