Post on 23-Jan-2018
Payments and Commerce: Middle East and Africa
ByAlan Alden
@SeriesAPartnerswww.series-a.com
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PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
Why work with Series-A in the ME and Africa Deep experience, local knowledge and global contacts across five
continents in payments, telcos, govt, and the travel/leisure space
Negotiated complex international deals with companies and governments in both Africa, as well as the Middle East, including the Ministry of Finance and Road and Transport Authority in Dubai
Spent the past 10+ years immersing myself into the South African and Dubai tech and finance communities, where I have developed a strong network of friends and contacts up to the royal families in Dubai, KSA, as well as the leading entrepreneurs, CEOs, and investors in South Africa
Well respected visionary and consultant on where technology is heading, the underlying impact on industries, as well as go-to-market strategies
Strong Finance and Legal background (JD Degree and FinTech Investment Banking)
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Series-A Partners: Contacts Within the RegionDubai Holding: CFO, CTO, Head of Strategy Naspers: CIO, CEO of B2C, Head of M&A
Tecom (UAE): CEO Government: Premier of the Western Cape
Dubai RTA: (Metro, Buses, Cabs)
CEO Computicket:(largest ticket provider in Africa)
CEO, Head of Integration
Etisalat: Head of Corp Dev/M&A TAKEALOT: Founder / CEO
Visa MEA: Dir of Emerging Products Shoprite Holdings (SA): Owners
MasterCard MEA: VP of Government Relations FNB: Former CEO
UAE Ministry of Finance: Multiple Members Investec: Bankers
Expo 2020: Team Member (Al Gergawi Family) Fundamo (Visa SA): Founder/ Former CEO
Jumeirah Group: CEO WeChat Africa: Head of Operations
Emaar Group: VP of Marketing Clifftop Colony (top tech banker in SA): CEO
Orange: Innovation/Investment team Coronation Fund Managers: Chief Investment Officer
PlatinumList:(largest ticket provider in Middle East/UAE)
Founder/CEO Cape Venture Partners: Partner
neXgen Advisory: (Dubai, Abu Dhabi, Kuwait, etc)
CEO - Lead Consultant to HH
Sheikh Mohammed on SmartCity
ACITS (Saudi Arabia): CEO
Close personal friends with the Gergawi and Al Mulla families in Dubai
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Messaging: The Fastest Growing Platform
1.4Billion
Current Users
2.5Billion
2018
OPPORTUNITY
1.1 Billion Additional Users
Africa and Middle East Leading the Way
PROJECTED ADDITIONAL USERSBY GEOGRPAHY
Asia Pacific265
Million Users
North America244
Million Users
Europe73
Million Users
Latin America
45Million Users
Africa and Middle East
579Million Users
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Middle East Internet Overview
* As of Nov 30, 2015** As of Nov. 15, 2015
Middle East Population:
242 Million*
Internet Users: 128 Million
Penetration: 52.9% (world Avg-46.4%)
Facebook Users: 49.4 Million**
FB Penetration:(% of Internet Users)
40.1% (World Avg- ~38.6%)
WhatsApp % Penetration of Internet Users
63%
CountryInternet Users
Facebook Users WhatsApp %
Israel5.9M4.4M
Iraq11M11M Iran
46.8MNA (Blocked)
KSA18.3M12M52%
UAE8.8M6.3M61%
Jordan5.7M4.1M
63%ME/Africa
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Key Middle East Considerations
Shariah law prohibits Muslims to engage with any money lending entity that charges interest, requiring financial providers to provide Shariah compliant offerings, including credit cards
70-80% of online purchases of physical goods in the ME are paid through Cash-on-Delivery, while 30% is paid online 47% of consumers in the ME own some form of payment card
UAE and Saudi Arabia account for ~80% of the smartphone usage and ~50% of eCommerce With 75 and 68%(of its populations), Qatar and the UAE have the 3rd and 5th highest rates of social media
usage in the world. Both have expat populations of ~85%
eCommerce’s potential has been recognized in 2016 with Wadi.com raising a $67M Series A Round and Souq.com’s $275M round, both based in the UAE
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Key Middle East Considerations
Distant second place behind WhatsApp
42M+ Registered Users
70% Active Daily
430M+ Message handled daily
200m+ Stickers sent/received monthly
Nearly 84% of users in the region have access to WhatsApp
~40% of Arab users said it is their preferred social app
Leading Messaging Service in: Lebanon, Qatar, Saudi Arabia, and the UAE
80M total users in the region at the start of 2015
87% of total internet users are Facebook subscribers 84% access via mobile
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African Internet Overview
* As of Nov 30, 2015** As of Nov. 15, 2015
African Population: 1,201 Million*
Internet Users: 349 Million
Penetration: 29.1% (world Avg-46.4%)
Facebook Users: 124.6 Million**
FB Penetration:(% of Internet Users)
37.6% (World Avg- ~38.6%)
WhatsApp % Penetration
of Internet Users63%
Africa has 9/10 countries with the lowest internet penetration rates(ranging from Niger:2.0%-Burundi:4.6%)
CountryInternet Users
Facebook Users WhatsApp %
Nigeria92.7M15M
Morocco20.2M10M
Tunisia5.4M5.2M Egypt
48.3M27M
Ethiopia3.7M3.7M
Kenya32M5M
Angola3.3M5.1M
South Africa26.8M13M76%
(of Internet Users)
63%ME/Africa
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African Market Overview
1/3Adults With Access to Bank
Accounts
23%African
Smartphone Penetration
85%Kenyans Using
Mobile Money Transfers
Increasing adoption will drive messaging and payments
70-80%Smartphone Penetration in
other parts of the world
51%Latin American Adults with
Access to Bank Accts
Solutions for the unbanked are imperative in helping achieve financial freedom
0.1%Nigerians Using
Mobile Money Services
Large dichotomies exist in Africa due to trust, awareness, and knowledge
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African Market Overview
In 2015, mobile money generated $656m in revenue in and in the next four years this is expected to double to $1.3 billion
Emerging markets are developing the most innovative payments offerings, including m-Insurance, microloans, and other mobile payment offerings
Instant mobile-to-mobile international money transfers are becoming the norm
PayPal’s Xoom teaming up with mPesa to send remittances directly into users accounts
Blockchain technology has the potential to provide more efficient forms of trading, transfers, and settlement to traditionally multi-party transactions
eCommerce is continuing to accelerate as better logistics, infrastructure, and selection continue to be put in place Same day delivery is arriving to major cities and becoming an instant game changer!
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Internet.org
With 9 of the top 10 countries with the lowest internet penetration in the world, Africa is well positioned to benefit from Internet.org
Corruption on all levels is endemic in these areas, so understanding the corporate, governmental, social, and religious landscape is imperative in succeeding in these environments
MTN and Vodacom, the two largest telcos in SA, are accusing messaging apps, including WhatsApp and WeChat, of “freeloading” on their networks and have asked the government to investigate. These ill feelings could spill over to Internet.org
Facebook has 7.3 million daily users in SA and 7 million access FB via mobile
Morocco has already banned VoIP over mobile networks
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The Competition:WeChat and the Influence of Naspers
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Influence in the Region
Based in Cape Town, Naspers is a $50B public company that owns ~34% of WeChat’s parent company, Tencent $32M investment in China’s Tencent now worth $45B (37% ownership)
Largest tech investor outside of the US, focusing almost exclusively the BRICs and Africa
Largest African media company (digital TV, web and print holdings)
Ownership stakes include: 42% of TAKEALOT, the largest eCommerce site in Africa;
47.6%(and now more) of Souq.com, which just received $275M at a $1B+ valuation;
53.5% of Dubizzle, an online classifieds site in the UAE
Payments: PayU is Naspers’ online payment solution in the ME / Africa In Jan. 2016, Hired Laurent Le Moal, PayPal Europe’s CEO to become its new CEO Souq.com has its own payment gateway, Payfort, which will eventually move offline to the POS
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WeChat Africa
Tencent’s WeChat and Naspers have teamed up to take on FB’s popular WhatsApp service in Africa Recently launched WeChat Wallet in South Africa with partner Standard Bank
Actively building up presence in Nigeria, South Africa, Ghana, and other areas Nasper’s ownership of numerous digital assets, as well as DSTv, and newspapers will create multi-
platform marketing approach
WeChat has ~6 million registered SA users vs. WhatsApp’s 14m active WhatsApp users South Africa has one of the highest WhatsApp penetration/usage rates in the world
Recently announced plans to invest 50M ZAR into local entrepreneurs and technology innovations Currently invested in and integrated with SA startups: Money4Jam, PicUp, and OrderIn
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The Future:Messaging Today……eCommerce Tomorrow
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Messaging: The Fastest Growing Platform
1.1Billion
2018
Additional Users
Africa and ME Leading the Way
PROJECTED ADDITIONAL USERSBY GEOGRPAHY
Asia Pacific265
Million Users
North America244
Million Users
Europe73
Million Users
Latin America
45Million Users
Africa and Middle East
579Million Users
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The Two Horse Messaging Race
0
150
300
450
600
750
900
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
800+ million users
659 million users
212 million users
Facebook vs. Tencent/ WeChat*
Line (Japan)
WeChat / Weixin(China)
FB Messenger (US)
*WeChat, which is owned by Tencent, is called Weixin in Chinese
1B+ million users
FB WhatsApp (US)
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Messenger and WhatsApp’s Monetization
Payments
3rd Party Content
App Store
Advertising
Identity Management
Gaming
Travel B2B Services(Facebook for Business)
Payments
Payments Will Provide the Foundation
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How to Reduce B2C Friction?
Provide a Deeply Integrated Payments Offering Capturing Credit Cards is Key
WeChat and QQ have more than 200 million credit cards on their platforms
Ability to capture loyalty and other cards enables companies to quickly delineate user and provides FB with better ad targeting
Integrate Commercial Customers into the Platform Facebook has more than 50 million active SMB Pages
WeChat has more than 10 million “Official Accounts” within the WeChat app
Creates own ecosystem and “browser” type effect, keeping users within the platform
Ease of Communication is Always Key Messenger’s Threads Concept is a great start
M and other forms of AI will increase the personalization throughout process
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Monetization… FB’s Greenfield Opportunity
Facebook Global ARPU
Q4 2014 Q4 2015
$2.81
$3.73
Payments $0.19 Payments
$0.13
$3.60
Advertising
$2.62
Advertising
WeChat KaKao Talk Line
~$7.00
$4.24
$3.16
Asian Messaging Platforms Have
Proven the Potential of Monetization
Competitive Messaging Platform’s ARPU
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Monetization… WeChat’s Monetization
How Is WeChat (aka Weixin in China) Monetizing Users
Key Demographics
90% Users-18-36 Years Old
1.8:1 Male / Female Ratio
659M MAUs
1.1B+ Registered Users
100M Users Outside of China
Key Points Gaming is largest driver of revenue
54% of Tencent’s revenues
Parent co, Tencent, is now the biggest
gaming publisher in the world
$1.76B – Estimated influence on
lifestyle spending
50% of Users who use Taxi booking
feature spend an avg of $16/ month
20% of users spend $30 or more a
month on Official Account Services
200M Users are set up for payments
~$7.00
E-Commerce Services~20%
Gaming
~55%+
Revs
Advertising~15%
Other~10%
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The Model: WeChat Platform / Ecosystem
Gaming
Content
More than 10 million “official accounts” on the WeChat platform
Many businesses launch on WeChat before launching their own standalone apps
Has created an “app within an app” ecosystem
Businesses
Payments
More than 200 million cards linked to the WeChat and QQ platforms
Linked to many city services providers for bill payment
Users forced to provide payment details to interact with certain groups or businesses
More than 50% of WeChat’s current revenues
Largest portion of value-added services (VAS) revenue coming from gaming
Parent company, Tencent, is largest game publisher in the world, and owns stakes in Riot, Epic Games, Glu, as well as a 10% stake in Activision Blizzard
WeChat / Tencent have gained exclusive streaming rights to sports and entertainment content providers, including: the NBA, FOX Sports, 21st Century Fox, HBO, National Geographic, Warner Music Group, and more
Aggressively going into emerging markets outside of China and creating exclusive content deals with local entertainers
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WeChat Emerging Markets Case Study:Content Acquisition in South Africa
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Cliffcentral.comWeChat Gambles on Gareth Cliff, South Africa’s Howard Stern
On May 1, 2014, Gareth Cliff, the most popular media personality in South Africa
left terrestrial radio to launch his own online station, CliffCentral.com
with the help of WeChat and mobile provider MTN
Key Considerations To Success of Partnership: Current media consumption habits
• Will customer acquisition be “evangelical sale” to gain new listeners to a new platform
Cost of streaming data for listeners/users outside of MTN
• Customers, especially younger ones in emerging markets, are very price sensitive
• Which carrier is the best partner: evaluation customer segmentation/ breakdown
Offline and online promotions and advertising
• What kind of resources will be required to market the new platform
• FB would have a distinct advantage here by leveraging previously “likes” and similar interests for targeting
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In Conclusion….
Someone who understands the landscape, the culture, the major players, and intimately understands the competitors will be
required to best move Facebook forward in the region
Facebook has created an “incumbent” position in the ME and Africa with WhatsApp and the traditional Facebook platform,
but the competitors are well financed and have deep roots in Africa
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Series-A Partners: Contacts Within the RegionDubai Holding: CFO, CTO, Head of Strategy Naspers: CIO, CEO of B2C, Head of M&A
Tecom (UAE): CEO Government: Premier of the Western Cape
Dubai RTA: (Metro, Buses, Cabs)
CEO Computicket:(largest ticket provider in Africa)
CEO, Head of Integration
Etisalat: Head of Corp Dev/M&A TAKEALOT: Founder / CEO
Visa MEA: Dir of Emerging Products Shoprite Holdings (SA): Owners
MasterCard MEA: VP of Government Relations FNB: Former CEO
UAE Ministry of Finance: Multiple Members Investec: Bankers
Expo 2020: Team Member (Al Gergawi Family) Fundamo (Visa SA): Founder/ Former CEO
Jumeirah Group: CEO WeChat Africa: Head of Operations
Emaar Group: VP of Marketing Clifftop Colony (top tech banker in SA): CEO
Orange: Innovation/Investment team Coronation Fund Managers: Chief Investment Officer
PlatinumList:(largest ticket provider in Middle East/UAE)
Founder/CEO Cape Venture Partners: Partner
neXgen Advisory: (Dubai, Abu Dhabi, Kuwait, etc)
CEO - Lead Consultant to HH
Sheikh Mohammed on SmartCity
ACITS (Saudi Arabia): CEO
Close personal friends with the Gergawi and Al Mulla families in Dubai
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Thank You
Contact Information:
Alan Alden
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
alan@series-a.com
@SeriesAPartners
www.series-a.com