World Wide Worx has questioned the viability of the service in South Africa since it was luanched in 2010.
“We identified no less than 13 factors for its success in kenya that were not present in South Africa'” said World Wide Worx managing directore Arthur Goldstuck (also editor-in-chief of Gadget).
Vodacom CEO Shameel Joosub said today: “Vodacom’s decision is based on the fact that the business sustainability of M-Pesa is 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 in its current format in the mid-term.”
A key factor for the explosion of M-Pesa in Kenya had been the low level of financial inclusion there – fewer than 10% of the population had bank accounts at the time of its launch in 2007. South Africa has the highest banked population in Africa, and a thriving retail money transfer market.
“In other markets where financial inclusion is limited and where there is a more supportive macro environment, M-Pesa continues to gain solid traction based on exponential growth in customer acquisition,” Vodacom said in a statement. “Kenya and Tanzania are prime examples of this. It is important to note that this decision does not affect M-Pesa customers in Tanzania, Lesotho, Mozambique and the DRC, where the product continues to grow exponentially.”
Joosub added: “Vodacom is fully committed to mitigating any inconvenience to customers impacted by the decision and assures all M-Pesa South Africa customers that their funds remain safe and readily accessible. We remain of the opinion that opportunities exist in the Financial Services environment and we will continue to explore these.”
Goldstuck said that every market in Africa had different dynamics: “One must establish the factors that work and don’t work in each market, and apply that homework rigorously.”