Millions more smartphone users in Africa will now have access to basic banking services like borrowing and saving as the popular mobile financial service platform M-Pesa expands to cover more countries.
M-Pesa began in Kenya 10 years ago under the umbrella of Safaricom, the Kenyan branch of U.K.-based Vodafone. Regulated by the Kenyan central bank, the platform gives users access to bank services through partnerships with local banks, even if they don’t have a bank account.
Safaricom has been looking to expand M-Pesa for some time, but its hands were tied by the wishes of its parent company, Vodafone. Now, Vodafone has transferred its 35 percent share in Safaricom to its majority-owned South African subsidiary Vodacom, retaining only a 5 percent share in Safaricom.
South Africa wanted Vodacom to lead the charge for Vodafone’s African expansion, so its government stood opposed to expansion moves by Safaricom. Now Safaricom is free to expand as it chooses.
Some markets have already shown interest. Liberia, Ethiopia and Togo have been courting Safaricom for some time. The company is thinking even bigger, with an eye on all African markets (except for Vodacom-dominated South Africa) where similar products previously failed.
“For us, the obvious advantage is that it [the Vodafone/Vodacom deal] now gives us an opportunity to try some stuff overseas,” said Bob Collymore, who has led Safaricom since 2010.
The CEO did not anticipate that much capital investment would be necessary for expansion. Rather, the company has invested in key skills over the past decade that it believes will translate into success in neighboring markets.
Collymore said he hopes to start talking deals by the end of the year.
The $2.6 billion share transfer deal also removed Vodafone’s power to veto selection of a chief executive for Safaricom. Shareholders must agree on terms for guiding future selections.