By Nqobile Dludla and Supantha Mukherjee

JOHANNESBURG/STOCKHOLM (Reuters) – Africa, with its internationally recognised musical expertise – and rising cell phone use – is central to Swedish music streamer Spotify (NYSE:)’s plans to increase its attain to a billion prospects.

As African artists equivalent to Nigeria’s Burna Boy and South Africa’s Black Espresso are streamed the world over, the continent was seen as an apparent alternative and is the house to greater than a 3rd of the corporate’s 85 new markets.

The issue is fee on a continent the place many individuals usually tend to have a cell phone than a checking account.

Which means Spotify’s first job because it implements a plan introduced in February to virtually double its footprint is to win over the telecom firms that usually equate to banks.

Phiona Okumu, Spotify’s head of music for Sub-Saharan Africa, informed Reuters the corporate secured “various fee strategies”, specifically M-Pesa, when it moved into Kenya in February.

Owned by Kenya’s largest telecoms operator, Safaricom, M-Pesa is used to ship cash, save, borrow and make funds for items and providers.

“Numerous African international locations are unbanked so which means they do not use bank cards and that is very true for lots of east African (international locations) and in Kenya you employ M-Pesa for probably the most half,” Okumu mentioned. Elsewhere in Africa, Spotify is searching for different collaborators.

“We’re having conversations with the appropriate companions to make sure that we’re offering options to fee issues that a number of African shoppers face in numerous components of the continent,” Okumu mentioned.

CHASING THE MOBILE MONEY

Irene Kophen, a Spotify premium person based mostly in Kenya, mentioned she prefers M-Pesa slightly than financial institution playing cards as a result of she thinks cell cash has made music extra accessible.

“Most of us have entry to our telephones, however not many people have playing cards, or financial institution accounts,” the 31-year-old informed Reuters.

Prices related to opening financial institution accounts, the gap to monetary establishments and the issue in assembly “Know Your Prospects” necessities due to insufficient proof of handle https://accuity.com/accuity-insights-blog/the-future-of-compliance-in-africa-how-to-satisfy-local-and-regional-needs-while-meeting-international-standards have added to the enchantment of utilizing telephones to pay.

“The previous few years have seen an emphasis on shifting in direction of growth of revolutionary banking providers by cell know-how to seize decrease earnings segments and the unbanked,” a spokesperson for South Africa’s Absa financial institution mentioned in an emailed assertion.

By 2020, sub-Saharan Africa had 548 million cell cash accounts, up 12% from 2019 – greater than another area on the earth, cell trade physique GSMA mentioned.

That has supplied banking entry in a continent the place about 43% of sub-Saharan Africans over the age of 15 had a checking account in 2017, based on the World Financial institution, which has not supplied any more moderen information.

WIN, WIN

Spotify’s native rivals, equivalent to Kenya-based and Danish-listed Mdundo and Nigeria headquartered Boomplay have additionally began to construct ties with cell operators.

Such partnerships are based mostly on telcom suppliers promoting music bundles that give prospects entry to a streaming firm’s premium service and exclusively-curated music mixes.

The collaboration can profit each side by boosting income and serving to to extend subscribers, however for the streaming firms it’s all-but important.

“It’s important that streaming firms get this proper, in any other case they’ll lose out on income from shoppers who have been keen, however unable, to pay them,” Charles Stuart, PwC companion and director of Know-how, Media and Telecommunications, mentioned.

For the telecom firms, which additionally embrace Airtel Nigeria and Vodacom Tanzania, the partnership will help to attain buyer “loyalty and stickiness” by including worth, Stuart mentioned.

MTN, Africa’s largest cell operator with 48.9 million energetic cell cash customers, is integrating its cell cash service onto its MusicTime app to permit funds, Serigne Dioum, group chief digital and fintech officer of MTN, informed Reuters.

“We’re speaking to gamers who’re music-only gamers and likewise we’re speaking to gamers who’ve broader attain in music, video and gaming and who can place our digital providers a lot better,” MTN’s Dioum mentioned.

Boomplay, which has 60 million month-to-month energetic customers, has allowed customers to pay by way of cell platforms equivalent to M-Pesa and Tigo-Pesa in Kenya and Tanzania.

It goals to roll out that choice in Francophone international locations, Tosin Sorinola, Boomplay’s director of artiste and media relations, informed Reuters.

Mdundo, which had 8.7 million month-to-month energetic customers as of June, has three telecom partnerships in Nigeria and Tanzania, and expects one or two extra comparable offers earlier than the top of this 12 months, Chief Govt Officer Martin Nielsen informed Reuters. “Relating to funds throughout Africa our key focus is bundling with telcos… as a result of telcos are those who’ve this attain and entry to folks’s pockets,” he mentioned.