Wednesday, Jun 23, 2021
International Finance
Telecom

Vodafone to turn M-Pesa into a bank to target Africa’s unbanked

Vodafone M-Pesa bank
Currently, M-Pesa accounts for 3.5% of Vodacom’s revenue

British multinational telecommunications conglomerate Vodafone is planning to transform its mobile money services provider M-Pesa into a bank to target the unbanked in Kenya.

Currently, M-Pesa accounts for 3.5 percent of Vodacom’s revenue (Vodafone’s telecommunication unit in Africa). Even though the revenue generated by M-Pesa is relatively less, many analysts see M-Pesa as an asset with potential.

By transforming M-Pesa into a bank, Vodafone hopes to increase the revenue generated.

Nick Read, chief executive at Vodafone told the media, “I believe M-Pesa can turn it into Africa’s largest unbanked bank. To achieve this, we need to explore strategic technology partnerships and work with key financial institutions. I believe there is the opportunity to roll out M-Pesa into other countries where we do not have existing mobile operations when the platform is further developed.”

M-Pesa was launched in 2007 by Safaricom, which is jointly owned by Vodafone and the Kenyan government. Since its launch, it has expanded to six other African markets including Tanzania, Egypt, and Ghana.

M-Pesa was also launched in markets such as India, Afghanistan, Romania, Albania, and South Africa. However, the company failed to survive in these markets and the operations were shut down.

Nick Read took over Vodafone in 2018, and since then, he has worked to separate Vodafone’s tower business and develop it into an independent company.

Vodafone bought a 100 percent stake in Vodacom’s business in Ghana. In a statement, Vodafone clarified that despite the acquisition, both the companies will continue to collaborate in Ghana through a pan-African partnership model.

Recently, Safaricom announced that it is launching a mobile saving service called Mali which will be directly targeted at M-Pesa users in the country. Mali will offer 10 percent yearly interest on a daily accrued basis and will directly compete with the banks.

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