Mastercard Inc., one of the world’s leading payment processors, has agreed to buy a minority stake in the fintech unit of MTN Group Ltd., Africa’s largest wireless carrier. The deal values MTN’s fintech business at $5.2 billion and is expected to be finalized soon, according to MTN’s CEO Ralph Mupita.
A strategic partnership for financial inclusion
The investment by Mastercard is part of a broader strategy to expand digital payments and financial inclusion in Africa, where many people still lack access to formal banking services. MTN’s fintech unit operates mobile-money platforms that allow users to send and receive money, pay bills, buy airtime, and access other financial products using their mobile phones.
MTN has more than 280 million customers across 21 markets in Africa and the Middle East, and its fintech unit has over 46 million active users and 581,000 agents. Mastercard will leverage its global network and expertise to enhance MTN’s fintech offerings and reach more customers and merchants across the continent.
“Through this partnership, we will enable millions of consumers and merchants to benefit from increased access to the global digital economy, driving faster economic recovery and unlocking significant opportunities for growth,” said Michael Miebach, CEO of Mastercard.
A lucrative and fast-growing sector for wireless carriers
The deal with Mastercard is not the first of its kind for MTN, which has been seeking to monetize its fintech unit and raise funds for debt reduction and network expansion. In March, MTN announced that it had sold a 20% stake in its fintech business to TPG Capital’s Rise Fund for $200 million. MTN also plans to list its fintech unit separately within the next year.
MTN is not the only wireless carrier that is tapping into the fintech sector in Africa, which has seen a surge of innovation and investment in recent years. Airtel Africa Plc, Safaricom Plc, and Vodacom Group Ltd. are also transforming their mobile-money businesses into digital platforms that offer a range of services beyond payments, such as lending, insurance, e-commerce, and remittances.
The wireless carriers are competing with a wave of fast-growing fintech startups such as Flutterwave Inc. and Interswitch Ltd., which have attracted funding from global investors and partners such as Visa Inc., PayPal Holdings Inc., and Facebook Inc. The fintech sector in Africa is expected to grow from $153 billion in 2020 to $218 billion by 2025, according to McKinsey & Company.
