Mastercard invests $200M into MTN fintech, MoMo offers loans via JUMO

Mastercard is investing $200 million into MTN Group's fintech business as it expands on a larger commercial relationship between the payment-technology corporation and the telecoms operator.

MTN said it had signed a definitive agreement with Mastercard for a minority investment in the fintech business – which is valued at $5.2 billion on a cash and debt-free basis. The deal is subject to customary closing conditions.

The listed operator made the announcement via the Johannesburg Stock Exchange (JSE) on Tuesday but said the deal is non-categorized in terms of the JSE listings requirements.

The planned deal was originally announced in August 2023, but at the time MTN didn't say how big the investment would be.

MTN believes the commercial relationship is a key enabler for the acceleration of its fintech business's payments and remittance services.

MTN's fintech offering includes MTN Mobile Money (MoMo), insurance, airtime lending and ecommerce.

The operator also said the Mastercard relationship will help technology and infrastructure growth in Africa and drive financial inclusion across the continent.

"MTN will continue to explore opportunities for other value enhancing partnerships and investments, subject to market conditions, with strategic partners and long-term investors," the group added.

MTN's fintech business saw the volume of transactions increase by 37% to 8.3 billion for the six months ended June 30, 2023. Meanwhile fintech service revenue grew by 21.7% year-on-year.

MTN MoMo offers 'Qwikloans' in SA

In a separate statement on Tuesday, MTN MoMo announced a partnership with banking technology company JUMO to launch short-term loans in South Africa.

The new service – called Qwikloan – enables MoMo users to obtain small, short-term loans on their mobile phones – ranging from R250 ($13.20) to R10,000 ($527) – either through the MTN MoMo mobile app or via unstructured supplementary service data (USSD).

MTN said Qwikloan has been available to smartphone users in South Africa since December 2023, but opening up access to include users of feature phones via USSD will enable South African individuals and informal traders to access funding for their ventures, without the need for costly data or smart devices.

MTN South Africa Chief Financial Services Officer Bradwin Roper said the goal of the partnership is to offer a reliable credit alternative via mobile, with significantly lower interest rates compared to banks.

"Unlike traditional banking institutions with a 24% interest rate on short-term loans, Qwikloan is able to reduce the cost of lending to a customer to as low as 10%. This is made possible by MTN MoMo's payment infrastructure and JUMO's core banking infrastructure with AI prediction capabilities," the telco said in a statement.

JUMO was founded in 2015 and has so far enabled the disbursement of more than $5 billion in loans to over 26 million customers and small businesses. JUMO uses artificial intelligence (AI) and machine learning to build accurate credit scores and targeted financial products for people who don't have a formal financial identity, collateral or credit record.

The company operates in seven markets in Africa: Ghana, Tanzania, Kenya, Uganda, Zambia, Côte d'Ivoire and South Africa, and market expansion plans are underway for Nigeria, Cameroon and Benin.

JUMO President Joe Mucheru said the MTN partnership will support entrepreneurs who need simple, quick access to working capital to grow their businesses.

"This work demonstrates how partnerships between financial technology companies such as JUMO, and mobile money providers are essential to driving financial inclusion and creating more opportunities for customers to borrow and save conveniently," Mucheru explained.

He said there is even greater potential to grow eligibility and accessibility by introducing bank partners to the initiative.

The collaboration is targeting South African entrepreneurs and the informal sector while JUMO's intelligent banking technology aims to reduce unit economics, making high-value products accessible at lower prices.

To apply for a loan, MoMo users need a registered South African ID number and must undergo a credit affordability check. Upon approval, funds are deposited directly into the user's MoMo wallet, with repayments collected from the same wallet.

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On Tuesday, MTN South Africa and Huawei also announced the completion of Africa's first scale deployment of an 800G optical network in South Africa. The 800G links were set up, with single fiber capacity of 48 Tbit/s, to connect data centers in Johannesburg, Durban and Cape Town.

"This domestic backbone will meet MTN's growing capacity requirements for its cloud-based business services, enhanced home broadband, and wireless networks. It also delivers optimal cost per bit and improved energy efficiency," Huawei said.

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*Top image source: DilokaStudio on Freepik.

— Paula Gilbert, Editor, Connecting Africa