In 2010, Vodacom launched MPESA in South Africa, its first launch in Southern Africa before introducing the app in Lesotho three years later.

Initially, the adoption of the service was moderate but never reached the heights recorded in Eastern African markets like Kenya and Tanzania.

Vodacom revamped the service in 2014 with hopes of better adoption. But after witnessing abysmal progress with 76,000 active users in six brutal years, it shut down the product in 2016.

In South Africa, about 75 percent of adults in the country have one or more bank accounts, according to a survey done by a FinMark survey. For mobile money to thrive, it needs an underdeveloped financial services industry which is in great contrast to what South Africa has and most analysts say this might have been the main reason why the service flopped in Africa’s second-largest economy.

1 First, the number of people within Kenya that had no access to financial services, especially rural areas was far larger than in South Africa. So M-Pesa found a ‘floating’ group that got the first link to not just technology (mobile phone) but also formal financial transactions.

2 Second, there are several large telecom players in SA from MTN, Vodacom, Cell C and Telkom and definitely no ‘sole’ telecoms player as Safaricom in Kenya.

3. Third, the banking partner in SA was NEDBANK – it does not have a reputation as a people’s bank and is more of a player in a different market to the wananchi in South Africa.

4. Fourth, the banking rules and regulations in South Africa are stricter than in Kenya. Remember the debate on regulating M-Pesa through Central Bank of Kenya (CBK)? If CBK had decided to lump M-Pesa with banks, it could probably have gone the South African way. 

So the challenge in South Africa is not about access.

Rather it is the ability to use various technologies to support how people save, spend and invest their money.

In this regard, banks in the country are focused on developing new financial products that will enhance savings schemes and pension funds.