After pulling the plug on its “failed experiment” with M-Pesa in South Africa four years ago, the telecom operator, Vodacom, is making another bold fintech bet by rolling out a super app, not unlike China’s WeChat.
And the second time might be the charm — or not, thanks to the telco’s troubled history with fintech and the state of financial services in South Africa.
In a press release dated July 20, Vodacom revealed that it is rolling out a super-app packed full with offerings, from “paying for your morning coffee, listening to a podcast on business management, sending money to your family, paying your utility bills, shopping online for everything from clothes, to groceries to electronics, checking on your business point of sales transactions and ordering new stock – all through the same, easy-to-use, super-app, from the convenience of your smartphone.”
To make this happen, the telco announced that its fintech arm, Vodacom Financial Services, had scored a technology partnership with the close-to-IPO Chinese fintech giant, Ant Financial Services, perhaps better known by the name of its popular product, Alipay, which claims over 1.2 billion users worldwide.
Vodacom says its new fintech play will not only serve individuals but also SMEs, which are being targeted with lending and insurance services. However, the company is believed to be also eyeing the approximately 11 million South Africans who make up the country’s unbanked population.
The whole thing sounds like a plan that might come together, up until it starts to register that the telco has been here before. And it didn’t go so well.
In 2016, Vodacom, which is the leading telco in South Africa accounting for 42 percent of the country’s mobile subscriptions as of 2019, was forced to euthanize the M-Pesa mobile money service which it launched in the country in 2010. The popular mobile money service that is M-Pesa is now co-owned by Vodacom and Kenyan telco, Safaricom, ever since the UK’s Vodafone divested its stake in the service in April.
Having seen M-Pesa quickly become a hit in East Africa (especially in Kenya where the current 83 percent financial inclusion rate was largely pushed by M-Pesa), Vodacom decided to “copy-and-paste” the service in South Africa.
But it turned out a largely underwhelming undertaking. M-Pesa backfired spectacularly in South Africa, the telco fell short of plans to capture up to 10 million South African users in 3 years by some distance. In fact, by 2016, Vodacom […]