South African telcos Vodacom and MTN are upping their play in the fintech sector, boosting their mobile money offerings through value-added services such as micro-lending and micro-insurance, among other digital finance innovations.
Vodacom said on Friday that it had launched VodaLend Compare, which offers micro-loans on an unsecured basis. VodaLend Compare also seeks to compare credit facilities, a much-needed service for consumers.
The micro-loans offered by VodaLend are backed by independent financiers that include South African banks.
"Vodacom Financial Services has launched VodaLend Compare, offering unsecured personal loans for customers," Mirriam Cassim, the chief officer of Vodacom Financial and Digital Services, said.
She added: "VodaLend Compare presents customers with tailored personal loan offers from independent providers and financiers such as Nedbank, African Bank, Finchoice and Boodle."
Rival operator, MTN – under its Mobile Money (MoMo) offering – has also been boosting its presence in the value added fintech space in both South Africa and its rest of Africa markets.
In 2021, MTN partnered with Jumo and Mansa Bank to provide micro-loans to small businesses in Ivory Coast.
MTN, which has now surpassed Kenya's Mpesa in mobile money users under its MoMo offering, said on Friday that "performance of the fintech business was encouraging, with approximately 5 million registered MoMo users" in South Africa.
Although monthly active user numbers for its MoMo offering in South Africa are still below 1 million, the company "progressed work on MoMo partnerships to accelerate the growth" of the business.
Its bigger mobile money continental rival, Mpesa has raised revenues from mobile money to nearly $1 billion (R15.8bn) in the year to the end of March," its parent company, Safaricom, said on Friday.
The fintech pivoted loans by South African telcos complement other mobile loans on the market as mobile fintech spreads.
The International Finance Corporation (IFC) is "supporting improved access to financial services across Africa under a partnership" with Wizzit bank. The partnership brings "secure and efficient mobile banking to hundreds of thousands of people in South Africa".
Telcos are increasingly partnering banks to develop financial products using data gathered by the telcos to build credit profiles based on transaction history. Microfinance institutions are also wading into this space by offering mobile-based loans.
Wizzit’s platform is one such example that capitalises on a transactional bank account that uses cell phones for making and receiving payments, together with a MasterCard-branded debit card, which can also be used at ATMs and point-of-sale devices.
About 400 000 people in South Africa have opened accounts with Wizzit, the IFC says.
The IFC advanced MTN $2 million last year to strengthen its mobile money business.
For the IFC, mobile money and related fintech innovations are "needed now, more than ever, to help small businesses to grow and to reach communities where access to financial services is low", especially in the South African and the greater African context
"Mobile money lending and agent lending are based on credit scores achieved through AI and machine learning data. They allow us to provide loans to individuals, based on the credit profiles that we have built," says South Africa's Airvantage.