The service, called Warid Pesa, arises out of a partnership between Obopay and telecommunication provider Warid Telecom (Pvt) Ltd., part of the Abu Dhabi Group. People sign up for the service via retail outlets in Uganda that sell Warid Telecom's mobile phone services. Customers reload accounts with cash via those authorized retailers and dial short codes on phones to access mobile prepaid accounts. This interface allows them to make money transfers, pay bills and top up prepaid cell phones electronically, without needing access to traditional bank accounts.
According to The World Bank, Uganda has a population of over 32 million, with 31.1 percent living in poverty. Thus, David Schwartz, Vice President of Product and Corporate Marketing at Obopay, pegs Uganda's unbanked population at over 10 million.
However, Uganda is experiencing robust development. The African Economic Outlook forecasted Uganda's real gross domestic product (GDP) growth rate to increase from 5.6 percent in 2011 to 6.9 percent in 2012, more than doubling the published GDP projections for the United States.
Deepak Chandnani, Chief Executive Officer of Obopay, said Uganda's economic growth, paired with the country's large unbanked population, makes the opportunity for Obopay in Uganda "very, very significant."
Distribution is the key factor in emerging markets, according to Chandnani. Obopay's initiative in India involves YES Bank Ltd. and device manufacturer Nokia. Obopay is leveraging the roughly 200,000 retail outlets in India that sell Nokia handsets to distribute Obopay's mobile wallet service. Since its launch in February 2010, the service has grown steadily and is now available in approximately 150 cities across India, Chandnani said.
"Similarly for Warid in Uganda, they have a pretty large distribution network through which they sell their SIMs and promote their service," he added. "And those are the first set of outlets that are becoming the mobile financial services agents where people can go and do cash-in and cash-out and offer this."
A recent report commissioned by fund manager Invest AD and conducted by the Economist Intelligence Unit said Africa will be an investment hotbed from outside entities over the next five years. The report, entitled Into Africa: Institutional investor intentions to 2016, cites Africa's abundant natural resources, including oil and precious metals, as big investment draws. But the chief attraction, according to the report, is the rise of Africa's middle class, which stands at 300 million of an overall population of 1 billion.
As consumers achieve greater financial stability and become more banked, their financial needs will change. But Chandnani does not see this development as a threat to Obopay. "If people find that they tend to be getting service well, and they are getting what they need, they tend not to churn," he said.
Chandnani expects Obopay to be operational in 10 developing countries by the end of 2012. But it's not the size of any specific population that has driven Obopay's strategy, rather it's the growth of the aggregate user base with each new roll out. "As our partners go out and market the service, they don't have a problem if it goes to 50,000 to 500,000 to 3 million users," Chandnani said, and added, "At a certain point it tips and then it really starts to take off."
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