Vodacom in major African fintech push, guns for 70m customers
Vodacom has set its sights on becoming Africa’s top fintech operator, saying financial services business is integral to its business model, and the telco is targeting over 70 million customers in the next three years.
Vodacom revealed its Africa fintech plans today as the company released details of its half-year results performance, with group CEO Shameel Joosub saying financial services is now the largest component of Vodacom’s new services revenue, hence the desire to accelerate continental push.
The telco’s planned aggressive fintech push comes as it is evolving from a telecoms company to a technology company, while expanding its ecosystem of products, a move that allows Vodacom to diversify revenue streams.
Resultantly, Joosub says, the telco saw strong growth potential for customer adoption and is targeting 73 million financial services customers by 2024.
“This target, which supports financial inclusion, forms part of management’s long-term incentives. Over and above this, Egypt and Ethiopia, each with populations of over 100 million people, provide transformational opportunities for M-Pesa,” he says.
Vodafone Egypt is the largest mobile wallet provider in the North African country through Vodafone Cash, according to the national telecoms regulatory authority.
In the six months to September, Vodacom’s financial services customers, including those on Safaricom, a group associate, reached 57.3 million.
The company’s financial services revenue reached R3.7 billion in the period, up 22.7% on a normalised basis.
Safaricom generated financial services revenue of R6.9 billion, up 45.8% on a normalised basis.
Joosub comments: “Our M-Pesa platform, including Safaricom, processed $26.8 billion of transaction value per month in the second quarter, up 31.2%.
“In South Africa, our recently launched super app, VodaPay, brings together world-class consumer and merchant capabilities and is supported by Alipay technology.
“The app will offer services ranging from loans and savings, international money transfer, seamless QR and person-to-person payments, to entertainment and personalised shopping experiences.
“Across our M-Pesa footprint, our super app roll-out, global partner co-ordination and best practice sharing will be implemented by M-Pesa Africa.”
Plans by Vodacom to accelerate fintech ambition on the continent comes on the back of the growing success of its payment platform, M-Pesa.
M-Pesa has become a key revenue stream for both Vodacom and Safaricom.
The platform processed $301.9 billion in transaction value over the last 12 months, with transaction value up 31.2% in the second quarter.
In six months to September, M-Pesa revenue grew 45.8%, which Vodacom says was supported by strong platform growth, “product adoption and greater value through updated peer-to-peer pricing from 1 January 2021”.
Total M-Pesa transaction values grew 51.5% to Kenyan shillings 13.7 trillion, while the volume of transactions grew 42% to 7.3 billion in the period.
“This equated to transaction values per month of $21 billion. Safaricom, together with M-Pesa Africa, continues to leverage on technological innovation to enhance access to financial services for consumers and enterprise customers,” says Joosub.
M-Pesa revenue was up 8.7% to R2.4 billion in the six months, contributing 22.4% of Vodacom’s international service revenues.
M-Pesa’s normalised growth of 27.3% was supported by strong performances in the DRC and Mozambique.
“Growth in the DRC and Mozambique was supported by customer growth, product adoption and the re-introduction of peer-to-peer fees.”
Nonetheless, in contrast, Joosub says, Tanzania posted normalised M-Pesa revenue growth of just 1.1%, negatively impacted by new mobile money levies introduced during July 2021.
“The levies adversely impacted revenue by R220 million and presents a material barrier to financial inclusion, with 1.3 million 30-day active M-Pesa customers relinquishing the service in the second quarter. We are engaging with the Tanzanian authorities to assess the impact of the levies on the industry, financial inclusion and the wider economy.”