NAIROBI (Reuters) - Vodafone’s popular mobile financial services M-Pesa will expand into more African countries, giving millions of people access to banking services without the need for a bank account, the chief executive of Safaricom said.
M-Pesa was set up a decade ago by Safaricom, Vodafone’s Kenyan business, and has long been expected to push further across Africa. Its technology lets users with even a basic mobile handset borrow money and save through partnerships with local banks.
M-Pesa, regulated by the Kenyan central bank, accounts for more than a quarter of Safaricom’s annual revenue, growing 21 percent in its year to March 31.
This month, UK-based Vodafone, one of the world’s top telecoms operators, transferred its 35 percent stake in Safaricom, Kenya’s biggest company by market value, to its majority-owned South African subsidiary Vodacom.
It retained a 5 percent stake in Safaricom.
The share transfer nullified South African government objections to expansion moves by Safaricom. South Africa wanted Vodacom to be the vehicle for Vodafone’s African expansion.
“This removes that effect today,” Bob Collymore, who has led Safaricom since 2010, said in his office on Thursday.
When analysts have previously queried why Safaricom did not expand into neighboring markets such as Ethiopia, Collymore has said Kenya was still growing. Now, he says, the business is ready to expand.
“For us, the obvious advantage is that it (Vodafone/Vodacom deal) now gives us an opportunity to try some stuff overseas,” he said.
The platform, which even allows users to buy government securities in Kenya, has attracted attention from other African nations such as Liberia, Ethiopia and Togo.
“The courtship started a little while ago. We are respected in Kenya as the mobile money country,” Collymore said.
Safaricom would now look at all African markets, apart from South Africa, where an M-Pesa-like product previously failed; and Tanzania, which already has a thriving mobile money service also called M-Pesa operated by Vodacom, Collymore said.
About 38 percent of Kenyans have commercial bank accounts compared with 77 percent in South Africa, according to FSD Kenya, a development program funded by Britain that works to expand access to financial services.
Expansion of M-Pesa was not expected to require a lot of capital as the critical investment is the skills that Safaricom has acquired in the past decade, the CEO said.
“I’d like to be able to talk about something before the end of the year,” he said.
The $2.6 billion share transfer deal also means that Vodafone no longer has a veto over the selection of a chief executive for Safaricom.
Under the previous shareholding structure, Vodafone had the right to veto the appointment but not the right to appoint the company’s CEO. Future selections will be guided by terms to be agreed on by the shareholders, Collymore said.
Editing by Katharine Houreld and Susan Thomas