Banks, Wireless Operators Compete for African Business

Banks, Wireless Operators Compete for African Business

A third of South Africa’s adult population who don’t have bank accounts have become the battleground for banks versus wireless companies vying for their business.

Mobile phones act as a bank account for millions of Africans, allowing them to transfer funds with services like M-Pesa run by Vodacom Group Ltd. and Safaricom Ltd.

Vodacom, South Africa’s largest wireless operator, and companies like it have muscled in on the nation’s expanding banking market as they have in Kenya, Tanzania and elsewhere, according to a report in Bloomberg Business Week.

At stake are 11 million potential customers, and so far, the banks are winning, the report says. Standard Bank has recruited 1,000 township residents in South Africa to block Vodacom in an area of sub-Saharan Africa with better-developed banking and regulatory systems than most.

The contest pits two companies that are at the top of their industries in South Africa. Johannesburg-based Standard Bank has 31 percent of the nation’s banking assets, according to the Banking Association of South Africa; Vodacom, also based in Johannesburg, said it controls more than half the wireless market. Standard Bank has a market value of $18 billion, while Vodacom is worth about $16.5 billion, according to Bloomberg Business Week.

Vodacom is overhauling M-Pesa for South Africa after just 1.2 million people registered for the service since its introduction more than two years ago in partnership with Nedbank Group Ltd., the smallest of the country’s four largest banks. By contrast, 17.1 million Kenyans and almost five million Tanzanians use M-Pesa.

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Read more at Bloomberg Business Week.