- Vodacom has bought a controller stake in its sister company, Kenya’s Safaricom.
- With it, it now has control of M-PESA, Africa’s most popular fintech platform.
- It says any winnings from M-PESA will now be included in its own winnings.
With South Africa’s Vodacom Group announcing that it now has a controlling stake in Kenya’s Safaricom, the company has managed to get their hands on the biggest and most used piece of fintech in the history of the African continent, M-PESA.
The Group invested a further R36 billion into Safaricom, increasing its stake in the business from 35 percent to 55 percent, meaning Vodacom now has control in its operations. Importantly, both companies fall under the Vodafone Group portfolio.
“Safaricom is widely regarded as one of Africa’s most attractive assets, combining telecommunications, fintech and technology services. It has consistently delivered strong financial results, with industry-leading margins and resilient cash generation,” said Vodacom in a press release.
“Through the flagship platform M-Pesa in Kenya, it drives high-growth fintech revenue, while expansion opportunities in Ethiopia and a growing suite of cloud, IoT and enterprise services position Safaricom for continued growth.”
M-PESA is entirely integral to Kenya’s financial system and used by most people in the country, with more than 47 million active users against a population of around 54 million people – that’s seven out of eight Kenyans!
The Bank of Kenya reported this year that there exist over 82 million M-PESA accounts in the country, which means many people create multiple accounts to transact.
It is the go-to platform for electronic money transfers in the country and for most of East Africa, with customers able to send funds to other phone numbers instantly, from as little as a few cents at a time, boasting an over 90 percent market share.
Safaricom takes a tiny commission from each transaction. In November, M-PESA profits grew a further $681 million, compared to the year prior.
Only Airtel offers a similar product in the country, which itself has an 8.9 percent market share, picking up the scraps.
What can Vodacom do with M-PESA now?
Firstly, Vodacom says that Safaricom’s results will be consolidated into its own results from now on, meaning the Vodacom Group will count Safaricom’s revenues as its own.
It will be able to pad its bottom-like with M-PESA’s continued winnings as Vodacom eyes revenues of R220 billion.
Secondly, Vodacom will be able to further oversee the much-talked about rollout of Safaricom in Ethiopia. A country that has a mostly unbanked, large population of young people ie. fallow ground for the growth of a quick and easy to use money transfer system.
Ethiopia is still expected to be a major opportunity, and Vodacom was among the consortium of companies that helped Safaricom with the launch back in 2022
In its latest results, Safaricom saw its profits fall by 8.4 percent to $714.3 million in Ethiopia as it ramps up investments in the Horn of Africa country.
“Acquiring a controlling stake in Safaricom strengthens our position as a market leader, while at the same time unlocks new opportunities to drive digital and financial inclusion at scale in Kenya and Ethiopia,” explained Shameel Joosub, CEO of Vodacom Group as part of the announcement.
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