In the latest edition of its Coffee Talk series, TechAfrica News founder Akim Benamara invited Vodacom CEO Shameel Joosub to discuss how digital and financial inclusion in Africa could be achieved and the challenges that have to be overcome.
In October this year, Vodafone Group, Vodacom Group, Safaricom and the United Nations Development Programme (UNDP) jointly released the “Digital finance platforms to empower all“ report. It found that digital and financial inclusion can highly impact economic growth in Sub-Saharan Africa. More precisely, the study revealed that countries with mobile money platforms in place have an annual GDP per capita growth rate that is one percentage point higher, on average.
To foster financial inclusion, the Vodafone Group already added financial services to its portfolio at an early stage: Back in 2007, Safaricom, Vodafone’s associate in Kenya, launched M-PESA, a fintech app that has since become the region’s leading mobile money service. Last year, Vodacom released VodaPay, a “super app“ backed by technology from mobile money specialist Alipay, that provides smartphone users with comprehensive digital financial services as well as online shopping and lifestyle tools.
Our mobile money platforms are now servicing over 63 million people and we are targeting to reach 75 million customers or more shortly. Initially, mobile money helped to deal with some real-world problems like sending money home securely. But you can do so much more with it. If you take it further, it brings consumers and business together and opens up new markets even for the smallest local vendor who can now sell his products across the continent.Shameel Joosub, Group CEO, Vodacom
According to his statement, one of the most powerful benefits of mobile money is the ability to “nanonize“ financial services: Microlending, micropayments or investing in fraction ownership of shares or government bonds for as little as a dollar make financial products available to a broad range of people. “It adds flexibility to the life of merchants and consumers“, Shameel concludes.
Bridging the mobile internet usage gap
Even if the perspectives for mobile financial services and their impact on Africa’s economic power look promising, to reach connectivity’s full potential it is about closing the mobile internet usage gap first. As per the report, only 40% of the population is connected to the internet today while 44 percent live in areas which are not yet connected.
There are many reasons why this usage gap still exists, one is of course coverage and being able to bring local coverage into areas which are less economical or which are more sparsely populated. So having the right model for that and driving digital inclusion is key.Shameel Joosub, Group CEO, Vodacom
The second main reason according to Shameel is affordability. “Device prices need to come down more to make it affordable for customers to be connected.“ He also urges governments to rethink their taxation policies. “If you truly believe in digital inclusion you can’t be taxing devices with a 40 to 50%. If we all work together with digital inclusion in mind then everybody will benefit.“
To enhance digital inclusion partnerships are crucial. Vodafone has established a strong partner network with other mobile operators or satellite and broadband providers. “We encourage people to partner with us. And even if it is underlying connectivity building undersea cables, e. g. with Facebook and Google. This is facilitating the opening up of those areas because you need the backbone to build on top of it. We are trying to coordinate all those efforts“.
Accelerating financial inclusion with mobile money platforms like M-Pesa (Graphic from the “Digital Finance Platforms to empower all” Report)
Towards an all-digital future
It still is a long way to go until digital inclusion will finally be achieved in all parts of Sub-Saharan Africa. However, Vodafone announced to stay committed to digital and financial inclusion in Africa while introducing new products to the market. For example, Safaricom has recently launched MPESA go in Keyna, a mobile money app that addresses teens and preteens aged 10 to 17 years. “We want kids to grow up with financial inclusion being part of their daily lives“, Shameel states. In addition, the company is expanding its insurance portfolio with its insurance platform launched in different countries. “In China, for example, they completely disrupted the insurance market with mutual insurance. That makes it affordable for everyone. I think that is the power of digital.“
From a technology point of view, the company is keen to bring state-of-the-art mobile technology like 4G/5G in combination with fibre broadband and satellite as a complement. “We believe that digital inclusion can enhance a country’s growth rate. But to this end, everybody involved, including the governments, have to play their part and need to see the mission,“ Shameel concludes.