Vodacom allays SA M-Pesa closure fears

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Rethabile Pitso

VODACOM Lesotho (VCL) has assured Basotho that M-Pesa is here to stay after Vodacom South Africa decided to discontinue the money transfer service from 30 June 2016 citing viability challenges.

M-Pesa is a mobile phone-based money transfer and micro-financing service first introduced by Kenya’s leading mobile money network operator, Safaricom, which is part of the Vodafone Group.  The word M-Pesa was derived from Swahili, where “m” refers to mobile and “pesa” means money.

Since its launch in the Mountain Kingdom, M-Pesa has grown in leaps and bounds with the introduction of other facilities such as paying for digital satellite television and utilities such as water and electricity among others.

However, Vodacom South Africa will discontinue its M-Pesa service in South Africa after it failed to reach its target of 10 million users, with only 76 000 people actively using the service in the country last year.

Vodacom South Africa CEO, Shameel Joosub, this week said the decision to discontinue the service was based on the fact that the business sustainability of M-Pesa was predicated on achieving a critical mass of users.

“Based on our revised projections and high levels of financial inclusion in South Africa, there is little prospect of the M-Pesa product achieving this (10 million target) in its current format in the mid-term,” said Mr Joosub in a statement.

“Vodacom is fully committed to mitigating any inconvenience to customers, and their funds remain safe and readily accessible.

“We remain of the view that opportunities exist in the financial services environment in South Africa, and will continue to explore such options with the ambition to play a meaningful role here in the not too distant future.”

He said in other markets, particularly in Lesotho, Kenya and Tanzania, where financial inclusion is limited and where there is a more supportive macro environment, M-Pesa continued to gain solid traction based on exponential growth in customer acquisition.

For its part, VCL also emphasized that M-Pesa in Lesotho was unaffected by the decision “and continues to be one of the strongest performing markets of M-Pesa for Vodacom Group”.

According to VCL, they currently have 1.3 million subscribers on their network, with 878 198 customers registered on the M-Pesa facility. On a monthly basis, around 200 000 subscribers use the M-Pesa facility.

In a statement released this week, VCL Executive Head of M-Pesa, Palesa Mphunyetsane, said: “M-Pesa continues to be a key area of focus and priority for Vodacom Lesotho and we are highly invested in continuing our impressive success story of how the product is changing the lives of Basotho.

“We introduced one of the most revolutionary innovations in the world last year with our ‘Airtime to M-Pesa’ service; we have recently launched the ‘Moyo Lesotho’ initiative where M-Pesa is being used to transform the lives of HIV-positive children and mothers by linking them to healthcare; and we are keenly looking forward to more innovations and expanding the M-Pesa ecosystem going forward.”

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