MOBILE communications giant, Vodacom Lesotho, has launched the VCL Financial Services company. The company is an independent entity which has been licensed by the Central Bank of Lesotho as a financial services provider. Vodacom’s popular, M-Pesa mobile money platform, will now operate under the new company.
Following the announcement of the establishment of VCL Financial Services, the Lesotho Times (LT) senior business reporter, Bereng Mpaki, sat down with Vodacom Lesotho’s Managing Director, Mohale Ralebitso, who outlined their expectations of the new company. Below are excerpts of the interview.
VCL Financial Services will target the un-banked population: Vodacom CEO
MOBILE communications giant, Vodacom Lesotho, has launched the VCL Financial Services company. The company is an independent entity which has been licensed by the Central Bank of Lesotho as a financial services provider. Vodacom’s popular, M-Pesa mobile money platform, will now operate under the new company.
Following the announcement of the establishment of VCL Financial Services, the Lesotho Times (LT) senior business reporter, Bereng Mpaki, sat down with Vodacom Lesotho’s Managing Director, Mohale Ralebitso, who outlined their expectations of the new company. Below are excerpts of the interview.
LT: Congratulations on the licencing of VCL Financial Services as a financial services provider. How is its licence different from that of a bank?
Mr Ralebitso: There are different types of licences issued by the Central Bank depending on the service that the financial institution intends to offer. In the case of VCL Financial Services, the licence is for the provision of mobile money services and other financial services offered through the mobile money platform in partnership with licensed institutions. For instance, VCL Financial Services can partner with a licenced lending or deposit taking provider to provide loans or savings products on the mobile money platform. A bank is licenced under the Financial Institutions Act to conduct banking business. This means that a bank is allowed to take deposits from customers and offer lending services against the deposits. On the other hand, VCL Financial Services is licensed under the Payment Systems (Issuer of Electronic Payments Instruments) Regulations as a mobile money issuer. This means that it is licenced to issue e-money and ensure execution of payment instructions. Mobile money funds are held in trust accounts with approved commercial banks, and the money in M-Pesa should be equal to the money in trust account.
LT: What motivated you to establish a separate financial services company?
Mr Ralebitso: The phenomenal growth of M-Pesa has resulted in the decision to separate it from Vodacom Lesotho’s GSM services to effectively satisfy the dual purpose of complying with regulatory requirements. This also enables us to enhance our financial services functions to make them more responsive, efficient and effective in addressing national and individual financial management needs. The new company design includes more efficient structures that will ensure compliance and good corporate governance practices.
LT: Although VCL Financial Services is an independent company, it is fully owned by Vodacom Lesotho. How will it be affected by the Lesotho Communications Authority Regulations that require 4 percent of net operating income to be paid as the annual licence fee?
Mr Ralebitso: No comment on this as the matter is still in court. However, we are clear on how financial services providers are regulated and what we need to do to comply with those regulatory obligations and we will continue to complid to date as to date
LT: How do you think the traditional banks will respond to your entry into the financial services market?
Mr Ralebitso: We are really not in competition with banks but we complement each other. We have over 8000 agents and more than 3000 merchants across the country. We see ourselves as the bridge in enabling financial inclusion of the un-banked population and small businesses. On the unbanked and thereby of small businesses, our future focus will be on providing savings, investments and lending solutions for individuals and small, medium, and micro enterprises (SMMEs) in partnership with licensed financial institutions. With time this may include wealth management and collection services
As we engage very closely with our customers, we are able to generate financial behavioural data which benefits all partners in real credit scoring. We then use that data to enhance the potential bankability of our customers which then allows them to access facilities, and services through our strategic partners most of whom are banks. So, we work very well with banks and we are hoping for more synergies that will accelerate financial inclusion.
LT: Are you also considering going full on to get a banking licence?
Mr Ralebitso: Currently we happy partnering with commercial banks and other licensed financial institutions to offer innovative products. We are offering everything from group savings and insurance products to cross-border transfers and ticketing among others. Our current focus is placing significant emphasis on enhanced governance and controls through the establishment of various departments, including risk, internal auditing, and anti-money laundering and by strengthening strategic partnerships with relevant institutions.
LT: We have seen the TechFins and Fintechs of this world develop into financial services behemoths just like Alipay, WeChat Pay and Apple Pay. What should we expect from VCL Financial Services beyond the generic financial products?
Mr Ralebitso: It is early days but it is worth mentioning that VCL Financial Services is working on solutions that will eventually simplify the everyday lives of Basotho and offer them seamless financial solutions that cater more intuitively to their needs. The plan is to take advantage of our infrastructure and technology to enable a wide range of e-commerce capabilities. We do have the ambition to one day get to a stage where we can we have a super app that will allow us to extend our proposition to customers to include shopping, entertainment and more – a virtually market place for all.
It would mean that an ordinary Mosotho would be able to get their ways onto our platform and offer their services in their catchment area, or next town, or neighbouring country or internationally for that matter; and seamlessly receive their payments so that they can realise their ambitions to do whatever their hearts desire. And so we say further together.