Mastercard Incorporated MA and Visa Inc.V are reportedly investing billions into African companies that have powered a sharp proliferation in e-commerce on the continent.
Africa presents prime grounds for mobile money proliferation, attributed to the scarcity of conventional banking infrastructures, their remoteness from rural locales, and the fact that many people still earn low incomes, according to a news report by The Wall Street Journal.
As the year draws to a close, the U.S. Commerce Department anticipates that a whopping 435 million Africans will splash cash online, almost twice the level pre-pandemic, per the report.
Recent transactions have centered around mobile money services, which enable individuals to transfer money via basic mobile devices, and systems that ease such transactions for vendors like Uber Technologies, Inc. UBER, Netflix, Inc. NFLX and Estee Lauder Companies, Inc. EL.
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These investments are surfacing amidst a remarkable e-commerce expansion in Africa, a region where digital transactions have historically trailed other places, particularly North America, the report noted.
In August, Mastercard agreed to acquire a minority stake in MTN Group Ltd's financial technology business at a valuation of $5.2 billion. The financial details of the transaction or stake percentage remain undisclosed. The deal involves a commercial agreement on payments and remittances using Mastercard's technology infrastructure to expand in Africa.
Back in 2021, Mastercard strategically injected $100 million into Airtel Africa's mobile-money sphere, a significant segment of the Bharti Airtel empire — an Indian telecom behemoth. This savvy move placed the business's valuation at $2.65 billion.
Meanwhile, Visa, Mastercard's competitor, pledged to funnel $1 billion into Africa over the ensuing five years in 2022 to broaden its continental footprint, focusing on stretching the arms of its digital payment capabilities.
In a move reflecting that commitment, Visa recently ushered in the first group of 23 startups into its African fintech accelerator program. This initiative is designed not just for growth, but also for mentoring.
"The growth of mobile and digital technology [in Africa] presents a tremendous opportunity," a Mastercard spokesman told The Wall Street Journal.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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