Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out

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

VIEWS: 82 PAGES: 101

"The prepaid cards market has slowly gained popularity in South Africa, as 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. In addition, 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. While simple eligibility criteria established by Nigerian banks is expected to support the sales of prepaid cards in the country. 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. Moreover, 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. In Kenya, the prepaid card market is in its early stages of development and provides modest 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 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."

More Info
									                           Market Opportunities and
                           Emerging Trends in the Prepaid
                           Card Market in Sub-Saharan
                           Africa
                           Industry Forecast Report
                           Reference code: IS0207MR
                           Published: March 2012
BRICdata
John Carpenter House
7 Carmelite Street
London EC4Y 0BS
United Kingdom
Tel: +44 (0)20 7936 6400
Fax: +44 (0)20 7336 6813


www.bricdata.com




                                                      www.bricdata.com
  EXECUTIVE SUMMARY



 1 Executive Summary
 South Africa
 Market size
          The South African prepaid cards market valued ZAR30.3 billion in 2011 and this is expected to grow at a CAGR
           of 65.49% over the forecast period to value ZAR355.0 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 90% 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 ZAR215 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.




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: March 2012
  EXECUTIVE SUMMARY



 Nigeria
 Market size
          The Nigerian prepaid cards market valued NGN980 million in 2011 and this is expected to grow at a CAGR of
           47.91% over the forecast period to reach NGN6.97 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 NGN150,000 for individuals, and NGN1,000,000 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.

 Competitive landscape
          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.




Market Opportunities and Emerging Trends in the Prepaid Card Market in Sub-Saharan Africa                               Page 3

© BRICdata. This product is licensed and is not to be photocopied                                        Published: March 2012
  EXECUTIVE SUMMARY



 Kenya
 Market size
          Kenya‟s prepaid cards market valued KES68.1 million in 2011, which is expected to value KES60.1 million by
           2016, after recording a CAGR of -3.08% 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 3 million in 2010 to 7.5 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.

 Competitive landscape
          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.




Market Opportunities and Emerging Trends in the Prepaid Card Market in Sub-Saharan Africa                          Page 4

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




Market Opportunities and Emerging Trends in the Prepaid Card Market in Sub-Saharan Africa                           Page 5

© BRICdata. This product is licensed and is not to be photocopied                                     Published: March 2012
  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 
								
To top