Local M-Pesa is slow starter

AT THE UNVEILING of mobile banking service M-Pesa, Vodacom committed to a target of 10 million subscribers within three years. One month in and the operator says it is only just nearing 10 000 subscribers.

Vodacom says it is confident the take-up of M-Pesa is accelerating and has kicked off a nationwide road show, involving 343 destinations, including the outlying rural areas.

However, analysts point out that, at the current subscriber growth rate, it will take Vodacom approximately 10 years to achieve its target.

World Wide Worx MD Arthur Goldstuck argues that it is simply a pipedream if Vodacom is trying to emulate the success of the service in Kenya.

He argues that the projected target may be good for marketing, but is unrealistic when considering the unique circumstances in which the local service has to operate compared to those in Kenya.

A loophole in the regulatory environment in Kenya when M-Pesa was introduced meant mobile operator Safaricom did not require a formal banking partner to go to market with M-Pesa, explains Goldstuck.

In the South African context, Vodacom had to partner with a formal banking institution, Nedbank in this case, which immediately increased the complexity and cost of the service. An increase in these two factors, Goldstuck maintains, directly prevents the service from achieving any meaningful market penetration.

"The service is ideally suited to citizens at the lowest wrung of the economic ladder for which every rand is significant," he states.

Frost & Sullivan industry analyst Spiwe Chireka is more confident of M-Pesa`s success but notes that SA`s banking environment, is a lot more mature than Kenya`s.Chireka also points to the fact that Safaricom unveiled the service in an unrivalled market and enjoyed no direct competition for the first 18 months of the service.