Michael Joseph leads revamp of M-Pesa in South Africa

Mr Michael Joseph: More agents are on the way. FILE
Mr Michael Joseph: More agents are on the way. FILE 

Former Safaricom CEO Michael Joseph has stepped in to help rescue the underperforming M-Pesa service in South Africa with a re-launch of the mobile money transfer set for January.

Mr Joseph says the revamp of the service, which was introduced in South Africa in August 2010, will see the agency network of M-Pesa increased to include ATMs, shops and supermarkets to replicate its Kenya success.

The money transfer service has attracted 1.2 million subscribers since its launch in South Africa or four per cent of the 31 million subscribers under Vodacom—which is majority-owned by Vodafone, the owner of the M-Pesa concept.

Mr Joseph pioneered M-Pesa in Kenya in 2007 where the service has about 18.1 million subscribers of Safaricom’s 20.1 million customers and now account for nearly a fifth of the listed firm’s sales.

“M-Pesa has not been very successful in South Africa mostly because the distribution network was not that good and is mainly through partnerships with retail chains like PEP Store,” said Mr Joseph, who is now the director for mobile money at Vodafone, which owns 40 per cent of Safaricom.


“We plan to bring more agents on board including spaza shops (informal kiosks), pharmacies and more supermarkets in a fashion similar to Kenya.”

In Kenya, M-Pesa has grown its outlets to include 78,856 agents, up 73 per cent from last year’s numbers, as Safaricom eyes a new platform that will allow users to make bulk instant payments for corporate services such as salaries, pensions and bills.

M-Pesa has been introduced in more countries including India, Tanzania, Mozambique, Lesotho and Egypt whose operators pay Vodafone a fee for deploying the service in their networks.

The service has, however, failed to take off in South Africa as anticipated, with Mr Joseph attributing its low success rate to the increased preference of plastic money.

“South Africa is a First World market and most people use credit cards for daily transactions,” he told the Business Daily.

Vodacom has informed M-Pesa customers via SMS that they will not be able to transact over Nedbank ATMs from January 15, 2014 “until further notice”, according to South Africa’s press reports.

The mobile operator asked clients to use Nedbank branches and M-Pesa outlets to move money to or from their accounts.

“Next month’s re-launch will see us directly link customers’ mobile money account with a debit card from which they can directly withdraw their money from an ATM,” said Mr Joseph.

Different approach

“This offering is different from the approach used in Kenya where you still have to send your money to the bank account once you receive it on your phone.”

In South Africa, M-Pesa customers are charged Sh50 for withdrawals which are less than an equivalent of Sh8,300 and Sh20 to send money which is below Sh41, 500.

In Kenya, it costs Sh110 to withdraw Sh8, 300 and Sh82 to send Sh41, 500 to a Safaricom subscriber.