Vodacom reports that it’s become the biggest mobile money operator across the African continent, a significant piece of news that discounts the company’s failure to make the M-Pesa thing work in South Africa.
This piece of news feeds into the prevailing scramble for mobile money markets on the African continent by telecoms and banks. That scramble is visible from the movement made by the continent’s largest mobile phone network operator, MTN, in partnership with Ecobank.
The activity is informed by the thinking that mobile money represents the banking market of the future, a key instrument of financial inclusion, in a continent with poor physical banking infrastructure.
Vodacom reported its mobile money position together with its latest financial results. Group CEO, Shameel Joosub, says “In our International operations, we continue to focus on data monetisation and growing financial services, through M-Pesa.”
He adds that M-Pesa is becoming a key driver of growth. The group has gathered a total of 32.3 million M-Pesa customers, including Safaricom. That, says Joosub, makes us the biggest mobile money operator across the continent. You can be sure that the MTN/Ecobank formation will have something to say about this claim.
He adds that M-Pesa now contributes 13.8% to the group’s international service revenue and 28% to service revenue in Safaricom. “We still see huge potential in getting all countries to the same level of sophistication as Safaricom and further growing M-Pesa capabilities.”
But the Mobile Money thing has failed to catch on in South Africa. This is perhaps due to the factor of the country’s advanced financial services infrastructure. Banks like FNB are actually carving their own digital paths without the help of telecom players.
Vodacom reports that M-Pesa is seeing accelerated uptake in Mozambique, Lesotho, Tanzania and the Democratic Republic of Congo (DRC). “This portfolio produced a 7.4%* increase in normalised service revenue on the back of rising customer numbers, strong demand for data and the accelerated uptake of M-Pesa, says Joosub.
He adds that despite a turbulent political context, Safaricom delivered net profit growth of 14.1% for the year. “This was underpinned by strong growth in data and M-Pesa revenues and a 5.1% increase in customers to 29.6 million.”
He notes that revenue from mobile money has become a significant contributor to the group. “During this period (12 months to March), the M-Pesa platform in our International operations, processed transactions worth US$1.9 billion, generating a 19.6% increase in M-Pesa revenue to R2.3 billion.
“In addition, Safaricom showed impressive results processing USD6.5 billion worth of transactions for the year and grew M-Pesa revenue by 14.2% to KES63 billion. Our investment and efforts to drive revenue diversification and digital transformation across the Group are having the desired effect.”
The scramble for Mobile Money markets is somewhat confirmed by a new report Digital Access: The Future of Financial Inclusion. Coming out of a partnership between the International Finance Corporation (IFC) and the Mastercard Foundation the report notes that “Financial inclusion is one of Africa’s great success stories of this decade.”
“Mobile money solutions and agent banking now offer affordable, instant, and reliable transactions, savings, credit, and even insurance opportunities in rural villages and urban neighborhoods where no bank had ever established a branch.” Notes the report.
The report carries a telling observation from the DRC where use of mobile money services reached 16 % in 2017, helping to push the overall financial inclusion rate from 3.7 percent to 26%.
Mamie Kalonda, Chief Executive Officer of FINCA in the DRC says “I expect digital financial services will grow even faster in the next five years (in the DRC). Almost all banks are going mobile.” She added, “It is important to reach the rural areas, because that is where people are poor.”
Riadh Naouar, from the IFC said, “Looking ahead, we can see some interesting trends for the future. While East Africa has long been the star performer in terms of the evolution of digital financial services, West Africa is the new growth market. Not only in terms of reach, but also for innovation.”