Vodacom has given up on revolutionary mobile money service M-Pesa, in South Africa

End of the road for M-Pesa in South Africa.
End of the road for M-Pesa in South Africa.
Image: Reuters/Bogdan Cristel
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Vodacom, South Africa’s largest mobile network, announced Monday (May 9) that it will shut down its M-Pesa service in the country. The mobile money-transfer service will end June 30.

In South Africa, M-Pesa has failed to amass the number of users it did in Tanzania and Kenya. Launched in 2010, its goal was to reach 10 million users in South Africa in five years. Last year, Vodacom reported that of its 8 million M-Pesa customers in Africa, one million were registered in South Africa, with only 76,000 active 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,” Vodacom CEO Shameel Joosub said in a statement.

Vodacom, a subsidiary of the UK-based Vodafone, said it would continue to offer M-Pesa in markets where banking access remained limited, namely Mozambique, Tanzania, Lesotho, Mozambique and the Democratic Republic of the Congo.

M-Pesa’s struggle in South Africa is an outlier in the money-transfer’s nearly decade-long success story. M-Pesa has about 16.8 million active users worldwide, facilitating transactions of $1.2 billion each month, according to Reuters. M-Pesa remains most successful in Kenya, where it was first founded, but has also gained a foothold in several African countries. M-Pesa has also launched in India and this year entered the European market through Romania.

Faced with a slow uptake after its initial launch in South Africa, Vodacom relaunched the service in 2014, adding services like a PIN-protected Visa card and security chip, but the revamp failed to attract customers. M-Pesa was unable to muscle in on South Africa’s banking market, where about 77% of adults already have access to banking services. In under-serviced regions, South Africa’s big banks have been setting up small satellite branches and offering their own mobile money-sharing services. Major retailer Shoprite also offers a similar service.

South Africa’s onerous administrative requirements in the financial sector likely created an obstacle for M-Pesa. And with marketing and advertising for established banks already ubiquitous in the country, M-Pesa seems to have never really made its presence felt.