(Repeats Oct 12 story to additional subscribers with no changes
to the text)
JOHANNESBURG/STOCKHOLM, Oct 15 (Reuters) - Africa, with its
internationally recognised musical talent - and growing mobile
phone use - is central to Swedish music streamer Spotify's
plans to extend its reach to a billion customers.
As African artists such as Nigeria's Burna Boy and South
Africa's Black Coffee are streamed across the world, the
continent was seen as an obvious choice and is the home to more
than a third of the company's 85 new markets.
The problem is payment on a continent where many people are
more likely to have a mobile phone than a bank account.
That means Spotify's first task as it implements a plan
announced in February to almost double its footprint is to win
over the telecom companies that often equate to banks.
Phiona Okumu, Spotify's head of music for Sub-Saharan
Africa, told Reuters the company secured "alternative payment
methods", namely M-Pesa, when it moved into Kenya in February.
Owned by Kenya's biggest telecoms operator, Safaricom
, M-Pesa is used to send money, save, borrow and make
payments for goods and services.
"A lot of African countries are unbanked so that means they
don't use credit cards and this is very true for a lot of east
African (countries) and in Kenya you use M-Pesa for the most
part," Okumu said.
Elsewhere in Africa, Spotify is seeking other collaborators.
"We are having conversations with the right partners to
ensure that we are providing solutions to payment problems that
several African consumers face in different parts of the
continent," Okumu said.
CHASING THE MOBILE MONEY
Irene Kophen, a Spotify premium user based in Kenya, said
she prefers M-Pesa rather than bank cards because she thinks
mobile money has made music more accessible.
"Most of us have access to our phones, but not many of us
have cards, or bank accounts," the 31-year-old told Reuters.
Costs associated with opening bank accounts, the distance to
financial institutions and the difficulty in meeting "Know Your
Customers" requirements because of inadequate proof of address 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 appeal of using phones to pay.
"The past few years have seen an emphasis on shifting
towards expansion of innovative banking services through mobile
technology to capture lower income segments and the unbanked," a
spokesperson for South Africa's Absa bank said in an
By 2020, sub-Saharan Africa had 548 million mobile money
accounts, up 12% from 2019 - more than any other region in the
world, mobile industry body GSMA said.
That has 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 has not
provided any more recent data.
Spotify's local rivals, such as Kenya-based and
Danish-listed Mdundo and Nigeria headquartered
Boomplay have also started to build ties with mobile operators.
Such partnerships are based on telcom providers selling
music bundles that give customers access to a streaming
company's premium service and exclusively-curated music mixes.
The collaboration can benefit both sides by boosting revenue
and helping to increase subscribers, but for the streaming
companies it is all-but essential.
"It is critical that streaming companies get this right,
otherwise they will lose out on revenue from consumers who were
willing, but unable, to pay them," Charles Stuart, PwC partner
and director of Technology, Media and Telecommunications, said.
For the telecom companies, which also include Airtel Nigeria
and Vodacom Tanzania, the partnership can help
to achieve customer "loyalty and stickiness" by adding value,
MTN, Africa's largest mobile operator with 48.9
million active mobile money users, is integrating its mobile
money service onto its MusicTime app to allow payments, Serigne
Dioum, group chief digital and fintech officer of MTN, told
"We're talking to players who are music-only players and
also we're talking to players who have broader reach in music,
video and gaming and who can position our digital services much
better," MTN's Dioum said.
Boomplay, which has 60 million monthly active users, has
allowed users to pay via mobile platforms such as M-Pesa and
Tigo-Pesa in Kenya and Tanzania.
It aims to roll out that option in Francophone countries,
Tosin Sorinola, Boomplay's director of artiste and media
relations, told Reuters.
Mdundo, which had 8.7 million monthly active users as of
June, has three telecom partnerships in Nigeria and Tanzania,
and expects one or two more similar deals before the end of this
year, Chief Executive Officer Martin Nielsen told Reuters.
"When it comes to payments across Africa our key focus is
bundling with telcos... because telcos are the ones who have
this reach and access to people's pockets," he said.
(Reporting by Nqobile Dludla in Johannesburg and Supantha
Mukherjee in Stockholm; editing by Barbara Lewis)