Vodacom, Safaricom- African Telcos, Mobile Money and Financial Services, Mike Daly

Large populations in low- and middle-income countries across Africa, Latin America and Asia have incomes of just $5 to $15 a day. Long before Google Pay, with its focus on high-margin, high-infrastructure markets, African telcos figured out how to do it cheaper and first rolled out mobile money two decades ago. Western payment models do not translate to environments where users can't afford $0.50 transaction fees and need affordable financial services that work on smartphones without the need for bank accounts.

Africa’s telcos spotted the opportunity to serve that market with phone subscriptions and mobile money transaction fees that their customers can afford. So well have they done that consumers and small business owners have bypassed traditional banking and use mobile money for payments, receipts, loans, insurance and more

“Mobile money has continued to redefine Africa’s financial landscape, growing from a regional innovation to a cornerstone of economic activity. In 2023, the mobile money market reached $674.8 million. Projections indicate it will grow at a CAGR of 19.3%, reaching $3.45 billion by 2032. This growth is driven by increasing smartphone adoption, improved connectivity, and a young, tech-savvy population eager to embrace digital financial tools.”

By Ilona Limonta-Volkova, Forbes Magazine Jan 12^th, 2025

High income countries look forward to Crypto/Blockchain payment services and the GENIUS Act will be a catalyst to the adoption of Stablecoins and US government backed initiatives. Google’s recent AP2 platform announcements aim to enable agent driven digital payments within an incumbent ecosystem of banks, payment providers, merchants and cloud service providers.

African telcos already delivering digital payments including micro-payments, for customers including the large proportion without bank accounts.

Peer-to- Peer payment services have long been vital across Africa as is merchant pay from smallholder farmers selling crops to wholesalers, to owner/driver fleet operators collecting fares and charging goods delivery. Consumers paying matatu coach fares, retailers for goods to the addition of financial services such as embedded insurance and micro loans for businesses and consumers; the African market is vibrant.

Take Vodacom Group headquartered in South Africa

- Vodacom Group drives Africa's fintech revolution via digital services, with 18.1% YoY financial revenue growth in Q1 2025.

- Its platforms process $460B in mobile money annually, expanding financial inclusion through M-Pesa, Vodafone Cash, and VodaPay.

- Strategic 8-country expansion targets 120M financial users by 2030, leveraging network effects and product diversification.

By Julian West AInvest July 23^rd, 2025

“We (Vodacom Group) are well on track to meet our medium-term target of 25-30% Group service revenue contribution from beyond mobile services. Formerly termed “new services,” this segment includes digital and financial services, fixed connectivity, and IoT. In the quarter, beyond mobile services accounted for 21.4% of Group revenue, generating R6.6 billion in service revenue.”

By Gugu Lourie Tech Financials 2^nd Feb, 2025

Why are Vodacom and other African telcos such as Safaricom in Kenya and Ethiopia, Orange Money across West Africa, and MTN Mobile Money in Ghana targeting such large increases in revenue contribution ‘beyond mobile services’?

The telco revenue diversification angle is particularly timely. Traditional voice and SMS revenues are under pressure everywhere, and telcos are sitting on incredibly valuable assets - customer relationships, payment infrastructure, location data, and distribution networks through agent banking (human agents). They're natural platforms for embedded insurance because they already handle micro-transactions and have the trust infrastructure in place.

Nevertheless, there are technology and commercial challenges to overcome but Africa’s telcos mobile money operations look up for the challenges.

Technology challenges

These are exactly what separate real solutions from Silicon Valley demos. Building for basic smartphones with intermittent 2G/3G connectivity, limited battery life, and data-conscious users requires fundamentally different architecture than Western fintech apps. It's about:

Offline-first design: Core functions must work without connectivity, syncing when network is available
Ultra-lightweight apps: Sub-10MB downloads that work on Android Go devices with 1GB RAM
Battery optimization: Minimal background processes, efficient data usage
Progressive enhancement: Rich features for better devices, but core functionality on feature phones via USSD

Commercial challenges

Each country has its own cultural, legal & compliance, and business models meaning that a one-size-fits-all approach just will not work. Consider:

Large populations earning just $5-15 daily in informal economies
Large majority with no bank accounts
Mobile-first consumers
Fragmented transportation systems (matatus, jeepneys, ojeks, tuk-tuks, marshrutkas)
Governments pushing financial inclusion with pragmatic regulatory approaches
Telcos looking for revenue diversification beyond declining voice/SMS

Telcos are already tackling many of these issues and especially the creation and operationalisation of the vital ecosystems.

"The mobile industry has never been more important to the world's citizens and economy," says Mats Granryd, Director General of GSMA. "Mobile money is a game-changer for the financial inclusion of women and other underserved groups. It provides a gateway to a wider range of financial services, including savings, credit, and insurance, which can help people build resilience and improve their livelihoods."

Telco powered financial ecosystems

Unbanked users are already comfortable using digital mobile money, in parallel with cash of course. They also need insurance, loans and the means of paying and receiving digital money for both personal and business use. Parametric and embedded insurance are just starters in this market. Patrick Kelaghan has already helped local insurers in various African countries scale up services designed for local people so when he brought such a company, Motisure, to my attention, I took notice.

The CEO, Joel Macharia, writes.

“Stop trying to "bank the unbanked." Start understanding them.

We keep throwing banking apps at matatus (colourful buses and large transportation industry in Kenya). They keep using cash. Why? Because our "solutions" solve our problems, not theirs.

What if we stopped building for them and started building with their data?

Imagine:

1. A matatu/bus that approves its own loan for new tires based on daily revenue.
Insurance that gets cheaper when drivers drive safer.
2. An AI that knows a operator is ready to buy a 2nd vehicle before they do.
3. This isn't fantasy. This is Agentic AI—and it’s the missing layer that makes embedded finance actually work for Africa's informal sector”.

You can see such financial services, including insurance, at [app.safirisure.com and https://motisure.com.

Joel says “At Motisure, we're building the intelligent engine that turns real-time transport data into automatic financial inclusion. We're creating the system where:
✅ Banks/MFIs de-risk lending to "unbankable" businesses.
✅ Operators get capital & insurance without the paperwork.

National and International Platforms

The telcos I have mentioned are each strongly entrenched in their home core markets and opening subsidiaries in others. Nevertheless, cross-country payments and financial services currently involve a multitude of payment partners and agents and are still complex and costly.

Rethinking the role of crypto, blockchain, payments and financial services

There is an amazing opportunity to rethink the role of crypto and blockchain for the good of consumers and businesses. The Western model is an extractive model that applies high transaction charges and fees. Reading through Google’s AP2 announcements that will not change the model as high investments will be required by Google and its 60 international partners.

David Chaum is the man who founded DigiCash in 1989 and whose patents enable every secure transaction today; this means something. Chaum wanted regular people to control their money without surveillance or permission. He imagined cryptography empowering individuals, not corporations.

After forty years, is there a place for this approach?

Africa may be realizing Chaum's vision more authentically than Silicon Valley did.

I have been writing about the value of parametric and embedded insurance models built around ecosystems for some time; it would be wonderful to create a genuine triple-play:

Consumers win: They get financial services that actually meet their needs – payments systems and micro-insurance they can afford, tied to real economic activity, with transparent pricing
Telcos win: New revenue streams beyond declining voice/SMS, deeper customer relationships, and data insights that drive better service delivery
Merchants/operators win: Access to financial products (insurance, credit, maintenance alerts) that directly support their business operations

The crucial difference from the Western fintech model is that African mobile money platforms largely avoided the surveillance capitalism trap Chaum warned about. They focused on utility and inclusion rather than data extraction and manipulation. When a matatu operator gets predictive maintenance alerts through their mobile money app, it's genuinely helpful rather than a vehicle for selling them unnecessary products.

From meetings and conversations, I sense that "it is happening rather than know it is" but it feels right. The embedded insurance trend I spotted with SafiriSure and MotiSure suggests we're at one of those inflection points where multiple forces converge - regulatory openness, technological capability, market need, and business model alignment.

Chaum's broader point about cryptocurrency being a tool for empowerment rather than surveillance feels particularly relevant as these platforms consider how to expand while maintaining the trust that makes them work. The challenge will be scaling while preserving that genuine value alignment.

I expect to expand on these thoughts soon with platforms built with the needs of Africa’s and Latam’s markets at the fore and meeting the original expectations of Davd Chaum.

Some of Africa’s and Latin America’s telcos and innovators will own this transformation while others will spend years trying to catch up.

Where does this fit in your strategic thinking?