Vodacom South Africa has announced it will discontinue its M-Pesa product with effect from 30 June following a thorough review. CEO Shameel Joosub said Vodacom's decision is based on the fact that the business sustainability of M-Pesa is predicated on achieving a critical mass of users. According to Joosub, based on their 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.
In other markets particularly in Kenya and Tazania, where financial inclusion is limited and where there is a more supportive macro environment, Joosub said M-Pesa continues to gain solid traction based on exponential growth in customer acquisition. He said the decision will not affect M-Pesa customers in Tanzania, Lesotho, Mozambique and the DRC, where the product continues to grow exponentially.
Started in 2010 in South Africa, M-Pesa has failed to take off like in Vodafone's other African markets, notably Kenya, where its subsidiary Safaricom pioneered the mobile money business and counts nearly 16 million active users. Vodacom re-launched M-Pesa in 2014 in South Africa, but said in its 2015 annual report that while 1 million people had registered for M-Pesa, only 76,000 were actively using it.
