Super-apps on the rise in Africa and middle east zones
Technological development and digital innovation are on the rise in the Middle East and Africa as the regions are providing a friendly environment embracing these growths. A study by Mastercard has revealed that super apps such as ride-hailing services, grocery delivery and financial services such as buy-now-pay-later (BNPL) and microfinancing are rapidly sprouting in these continents.
The title of the study was “From online bazaar to one stop shop: The rise of super apps in the Middle East and Africa” and was carried out by Economist Impact. The study took into considerations factors contributing to the rise of the super apps in the regions. They nailed down the contributing factors to population growth, digital access connectivity, a diverse demographic, increasing trust and affordability.
The study gives a deep insight into the on the rise of these apps, their growth process across the zones, and the factors fueling and slowing down their expansion. And these included consumer norms with their policy, a wide-range of study draws on a comprehensive interview program with subject-matter experts and regional stakeholders.
The study also shows the distinction between the different ecosystems that drove to the rise of popular Chinese super-apps such as WeChat, Meituan or Alipay some years back as co mpared to the MEA regions where they are showing a promising progress. Incoming players to the industry are taking cues from the Chinese-born concept to recreate originals of their own.
“With the Middle East and Africa region projected to become the most populous area in the world, with a forecast population of 3.4 billion by 2050, this expanded market presents a wealth of customer data, which regional players could leverage to add value for all stakeholders. Mastercard, with its digital-first approach, can be that single technology provider of choice to connect diverse players such as telcos, digital e-tailers, and fintech to become super-apps by providing technology solutions, platforms, and propositions that enable a superior digital experience and drive greater inclusion for people across MEA,” said Ngozi Megwa, Senior Vice President, Digital Partnerships, Middle East and Africa.
The study of MEA’s fast rising super apps, highlights some key development areas, which include;
- Locally active super-apps are proliferating across the MEA region, but larger cross-regional players remain few. Firms such as Uber have emerged as local champions, expanding from ride hailing to restaurant delivery. MTN has introduced person-to-person mobile money payments on its Ayoba app. The acquisition sums for regional apps – from US$500 million (iFood) to over US$3 billion (Careem), all suggest a valuable market.
- The prevalence of low-end mobile phones, as well as high internet costs in the MEA, make super-apps an attractive product. MEA has historically been the region with the lowest levels of connectivity as well as high fixed-line broadband costs. Mobile operators have provided the region with affordable low-end smartphones. In many countries the advent of cheap smartphones has allowed populations to leapfrog desktop technology and adopt mobile apps as their first digital device. Super-apps offer an all-in-one platform that requires less bandwidth and data to operate.
- Super-apps can be drivers for financial inclusion in the MEA. For people living in remote parts of MEA with poor technological infrastructure, this offers an opportunity for greater digital inclusion. Furthermore, in remote areas where a lack of traditional bank branches has contributed to scant financial service provision, super-apps enable previously unbanked people to do financial transactions and become part of a wider financial ecosystem.
- The harmonization of national policies remains the biggest challenge to the scaling-up of super-app presence in the MEA region. The MEA region consists of more than 60 countries with over 1,000 languages and divergent economic, policy and cultural environments. Although the African Union and Gulf Cooperation Council are fostering the harmonization of industrial and data policies, for super-apps seeking to further their reach, the current fragmentation presents a significant operational, legal and financial burden.
“Our study clearly reflects that the development and future trajectory of super-apps is highly contextual to the geography and location in which they develop. Some of the ripe sectors in MEA that could throw up players to become super-apps are insurance across the GCC, the second-hand car market, online property brokers in the UAE, and digital remittances across Sub-Saharan Africa,” said Walter Pasquarelli, Research Manager, Tech & Society, Economist Impact.
The report also threw the spotlight on governments’ role. As the biggest spenders in the region, government choices over which direction to orient industrial and data policies will be key. Beyond the policies of individual governments, the harmonization of policies across the region is expected to be the core strategic choice that will determine the future of super-apps.