/ 1 June 2018

M-Pesa ushers in a new wave of banking infrastructure in Africa

Financial services are now available to millions of Africans who did not have access to them previously
Financial services are now available to millions of Africans who did not have access to them previously

Africa is the fastest-growing banking market by population size, and is a cornerstone of market growth for companies able to tap into its people’s unique needs. Once known as the ‘dark continent’, Africa is fast becoming electrified, and not only with physical lights — its potential is more realisable than ever before.

One of the best ways to remedy poverty is to give a population access to financial instruments. In the past, this would have been through a bank account at your local bank. However, M-Pesa has revolutionised our understanding of a bank, catering for the less privileged population and treating renowned African problems: access to health for women and HIV treatment.

M-Pesa is a mobile banking service that allows its users to store and transfer money through their mobile phones, eliminating the need for a conventional bank account for everyday transactions.

Today, M-Pesa is Africa’s biggest mobile money platform with 32 million customers across Africa. During the last financial year R25 billion was transacted monthly in Vodacom international markets and R85 billion was transacted monthly in Kenya where Safaricom is the market leader in mobile financial services. M-Pesa is giving vast sectors of the population access to financial instruments.

The key to stimulating growth is to give more people access to mobile phones and mobile connectivity.

Studies indicate a marked increase of people with bank accounts, particularly in Tanzania. M-Pesa has played a significant role in this achievement. Currently 6.4 million Tanzanians make use of M-Pesa — almost half of all Vodacom subscribers. This platform is also the birthplace of M-Pawa, which allows Tanzanians access to savings and loan facilities.

In Tanzania, Vodacom has introduced Lipa-Kwa, a merchant paying solution, which gives customers the convenience to transact with M-Pesa at more points of sale. Through M-Pesa and its associated financial instruments, Vodacom recorded $160-million in revenue this year.

Tanzania is a major producer and exporter of coffee and spices, and its economic performance is being boosted by a more financially savvy populace. No less than 37% of Tanzania’s GDP goes through the M-Pesa platform, an obvious boost to the country’s economy.

Lesotho’s economy, based largely on subsistence farming, can benefit from a populace that has access to financial tools, and M-Pesa is playing a role here too. With 30% mobile financial services penetration, M-Pesa has evolved to meet a wide range of customer needs by ensuring that BaSotho can make bulk payments for services such as school fees.

The M-Pesa platform now allows user confirmation to ensure security, and much like conventional bank accounts, allows M-Pesa users to have a beneficiary list. Empowering M-Pesa merchants has also been top of mind for Vodacom and with the point of sale system introduced, users can now enter their M-Pesa pins to make purchases.

Mozambique has also benefitted from this innovative platform, with 3.1 million M-Pesa clients. Mozambiquans now have access to loans through M-Pesa’s collaboration with two commercial banks in their country.

The Democratic Republic of Congo has 1.8 million M-Pesa clients, which allows customers to trade in Forex, have access to savings and loans and to purchase tickets in local leagues.

M-Pesa is thinking ahead to solve major challenges faced by many Africans; it has set in motion an initiative to protect Africa’s mothers. M-Pesa is allowing healthcare organisations such as Comprehensive Community Based Rehabilitation to transfer funds for bus fare to healthcare facilities for women with obstetric fistulas (holes that occur in the vagina, usually from childbirth). Over 55 million SMSs have been sent out in support of this campaign and 400 proud M-Pesa ambassadors are fully trained to be part of this campaign, which has benefitted over
3 200 women in rural Tanzania.

In Lesotho M-Pesa is used to enable patients to access healthcare services. This is done by issuing transport vouchers, allowing patients to reach healthcare facilities, assisting with over 150 000 HIV tests being carried out.

Africans have unique needs: M-Pesa’s platform is empowering them. Nearly $2-billlion (R25-billion)is processed monthly though this platform — proof of Vodacom’s ability to innovate in a cutting-edge, customer-centric manner.

M-Pesa helps to advance Africa’s economy

Africa’s household consumption is estimated at $2.1-trillion by 2025, which raises the question: how will this currency be used and consumed by Africans, and what changing needs can we identify and start to build innovations for? With many Africans still without a bank account, Africa must rethink how to financially empower its populace, while taking advantage of the growing mobile access penetration.

M-Pesa has created a space for itself in markets by ensuring that future users have access to its platform, by ensuring that Africans have mobile phones. This model is also followed by commercial giants such as Facebook; by creating new subscribers, impoverished markets demand and gain access to internet connectivity.

Vodacom has been at the helm of this mobile money innovation though M-Pesa, which caters to the unique needs of its customers and innovates as they become more sophisticated and tech-savvy. M-Pesa is a mobile money platform, allowing its clients to store and transfer funds through their mobile phones. The ability to process $1.9-billion monthly on its platform has taken different forms in each of the countries it operates. It is able to offer loan and savings options to its customers, and even allows for the purchase of tickets to events unique to the countries it operates in.

M-Pesa empowers the people it interacts with daily, and assists Africa in fighting pandemics such as HIV. It has assisted with treating over 3 200 mothers with obstetric fistulas in Tanzania, by transferring bus fare to mothers needing to visit healthcare facilities. Over 400 M-Pesa ambassadors took part in this campaign, which was also facilitated by the organisation Comprehensive Community Based Rehabilitation. Tanzania’s Moyo Project makes use of M-Pesa ambassadors. In Lesotho M-Pesa is playing its part in combatting the spread of HIV in Africa.

Gaining access to financial instruments is a rapid and efficient way to empower a society, allowing the populace to become financially literate, which stimulates economic growth. Nobel Prize laureate Muhammad Yunus, founder of Grameen Bank, changed a country through his micro-loan facilities in Bangladesh, showing how powerful micro-loans can be. M-Pesa enabling financial inclusion to communities, which otherwise would not have access to financial services, is playing a crucial role as an enabler in addressing the United Nation’s sustainable development goals.

M-Pesa’s contribution to financial infrastructure cannot be ignored; 37% of Tanzania’s GDP goes through this platform. This platform demonstrates the power of understanding the needs of Africans at a community level.