The acquisition will enable a more aggressive expansion strategy to other markets on the continent where the platform is not available. This was previously slowed down by the fact that Vodacom parent company Vodafone had a stake in the platform. In , the company scrapped the service in its home market, where it faced stiff competition and could not attract enough users to the platform.
A key impediment to M-Pesa gaining traction was the fact that the country has a well-established banking sector and most adult South Africans have bank accounts. Furthermore, South African banks have their own in-house fintech products developed for low-income or unbanked consumers, making the market highly competitive.
Because of this, the banks in South Africa tend to be the product innovators, while mobile network operators fulfil the role of enablers — unlike in other markets on the continent where large segments of the population are unbanked. We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community.
Vodacom Group has announced plans to launch a super app that offers financial and lifestyle services to its millions of customers. The news came out earlier this week via a statement released by the South African telco giant. Ant Financial Services, the China-based payments company, formerly known by the name of its signature product, Alipay, is also an affiliate company of Chinese multinational tech company, Alibaba Group.
The fintech giant claims to have 1. Additional details regarding the terms and offerings of this deal remain unclear at the moment, but from the statement released by both parties, the super app will be launched early next year.
From the statement, financial services such as insurance and lending will be made available for these businesses. Initially, the adoption of the service was moderate but never reached the heights recorded in Eastern African markets like Kenya and Tanzania.
Vodacom revamped the service in with hopes of better adoption. But after witnessing abysmal progress with 76, active users in six brutal years, it shut down the product in And with equal stake , they both operate the mobile money service in seven African countries. Those that are unbanked have found many workarounds, such as retail money transfer and airtime as currency," says Goldstuck. There is no shortage of ways for an SA consumer to interact with banks and M-Pesa in SA didn't offer much on top of that to make it attractive.
The lack of financial inclusion and the high perceived need, along with the ease of opening an account, resulted in the perfect storm for M-Pesa," adds Goldstuck.
However, Ovum senior analyst Richard Hurst believes there is still a massive unbanked market in SA and a huge potential to increase the penetration of financial services across the country. He points out M-Pesa's success in Kenya was partly down to the fact it launched when there was still a loophole in the existing banking regulations, which has since been closed. This enabled the operator to offer lower costs of transactions and compete head-to-head with the existing retail banks and gain a massive market share by virtue of its mobile subscriber base.
In SA, the market environment is slightly different," adds Hurst. When M-Pesa launched in SA in , Vodacom hoped to have 10 million subscribers within five years, but by the end of March , it only had around one million customers signed up in SA, with about 76 actively using the service.
The latest statistics paint an equally bleak picture. In contrast, Kenya-based Safaricom has over 22 million registered M-Pesa subscribers, and in terms of day active customers, there were
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