Vodacom and Alipay launch a super-app in Africa

FACTS

• Africa's largest telecom operator, Vodacom, has announced the launch of a super-app embedding financial and lifestyle services in the coming weeks. Called VodaPay, it has been developed in partnership with Alipay.

• Vodacom's new super-app will offer many services including:
  • loans and insurance, especially for small businesses
  • savings,
  • online payments, via QR or between individuals,
  • entertainment (e.g. music),
  • personalized shopping experiences.

• VodaPay will be available to South African customers in the coming weeks.

• Alipay proceeds as a technology provider alongside Vodacom.

KEY FIGURES

Vodacom has :

• 123.7 million customers
• 57.7 million customers for its financial services, +12.9% in 2020
• + 4.2% profit growth in 2020

CHALLENGES

• Promoting financial inclusion: More than 11 million South Africans still do not have a bank account. The deployment of services such as this Super-App is a way to make loans and other financial services available to a target group that was previously inaccessible.

• Continued growth: The announcement of the launch of its future super-app is coordinated with the publication of the Vodacom Group's annual results. With revenues up 8.3% (to R98.3 billion, or nearly €6 billion), the group was able to turn the tables after acquiring m-Pesa with Safaricom at the beginning of 2020.

• Taking advantage of a high-potential market: Long before the formation of the joint venture between Vodacom and Safaricom, M-Pesa had already inked partnerships with a number of payment giants such as PayPal and Alipay. M-Pesa illustrates the relevance of the financial inclusion model based on the use of mobile channels. By mid 2020, the service had 24.5 million customers in Kenya, a country with a population of 53 million. The service has since expanded to Tanzania, Mozambique, the Democratic Republic of Congo, Lesotho, Ghana, Egypt, Afghanistan and South Africa.

MARKET PERSPECTIVE

• Alipay's positioning in the African market is not new. Kenya-based regional financial institution Equity Bank and Singapore-based online payment company Red Dot, for example, signed a memorandum of understanding to introduce Alipay and WeChat Pay in East African countries in June 2018.

• These efforts by Alipay to deploy in Africa illustrate the global strategy of many Chinese players engaged in developing projects on the continent. The stakes are both political and economic.

• However, the shares of Chinese companies remain marginal compared to those of Western countries. The pandemic has also slowed down their development, even if their growth remains significant.

• According to Alicia Garcia Herrero, senior fellow at the European think-tank Bruegel, 72% of Chinese projects are in the services sector and 15% in manufacturing.