Vodacom Plans to Launch a New Fintech Service in South Africa
South Africa’s major telecoms company Vodacom Group has announced plans to launch a super app that offers financial and lifestyle services to its millions of customers. This decision observers say is not unconnected with its failed stint with M-Pesa, the continents leading mobile money platform. The new app being launched in collaboration with digital payment provider Ant Financial Services will make it possible for consumers in South Africa to shop online, send money and pay bills among other features.
The China based payments company Ant Financial Services 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 1.3 billion users worldwide and is said to be the most valuable private fintech company in the world at $150 billion, a valuation that might see an extra $50 billion when the company goes public in the coming weeks.
This deal with Vodacom will see Ant Financial Services license its Alipay technology platform to the South Africa telco and carry out operations as Vodacom Financial Services. 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.
One thing is clear, however: its offerings will not benefit only individual subscribers as small and medium enterprises aren’t exempt. From the statement, financial services such as insurance and lending will be made available for these businesses.
In 2010, Vodacom launched M-Pesa in South Africa, its first launch in Southern Africa before introducing the app in Lesotho three years later. 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 2014 with hopes of better adoption. But after witnessing abysmal progress with 76,000 active users in six brutal years, it shut down the product in 2016.
In South Africa, about 75% of adults in the country have one or more bank accounts, according to a survey done by a FinMark survey. For mobile money to thrive, it needs an underdeveloped financial services industry which is in great contrast to what South Africa has and most analysts say this might have been the main reason why the service flopped in Africa’s second-largest economy. However, the company blamed its failure on the country’s regulatory environment, stating that it was one of the worst regulatory environments for mobile money to thrive in Africa.
Since then, the South African telco has launched a joint venture of M-Pesa with Kenya’s Vodacom. And with equal stake, they both operate the mobile money service in seven African countries. With an imminent partnership with the Ant Financial Services, Vodacom is ready to take on not only mobile money but an array of services on one platform.
“We already offer South African customers an ecosystem of innovative digital financial services products. But this technology partnership with Alipay will enable us to be on par with leading global digital counterparts quicker and more efficiently,” the CEO of Vodacom Group, Shameel Joosub said in the statement.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry