The Vodacom Group, a telecoms giant in Southern Africa, is reportedly buying Kenya’s Safaricom. According to an article in Forbes magazine, published in May 2017, Vodacom Group is buying a 34.94 percent stake in Safaricom from the mutual holding company Vodafone. Safaricom is best known for its M-Pesa mobile money system and holds an estimated 71 percent of the mobile market in Kenya.
The deal will see Vodafone with 65 percent ownership of Vodacom, retaining five percent of Safaricom and Kenya’s government will continue with 35 percent ownership.
Shameel Joosub, Vodacom Group Chief Executive Officer, said, “This is an exciting occasion for Vodacom and a unique opportunity to diversify our revenue growth and profitability. Acquiring a strategic stake in Safaricom will provide our shareholders with access to a high growth, high margin, high cash generation business operating in a high growth market.”
Joosub went on to explain that Safaricom’s M-Pesa is a fiercely important driver of economic growth in Kenya and therefore the acquiring of Safaricom will greatly improve Vodacom Group’s footprint in East Africa. Together the two companies will deliver to 32 million clients in the financial services sector.
Kenya is a major economic player in Africa
Kenya has undertaken amazing advancements over the years and experienced unprecedented growth in the mobile commerce sector. And Kenya’s Safaricom is a fine example of the small group of pan-African companies that are raking in over one billion dollars in annual income. If you have a look at their story on the website, you can read about how Safaricom had a purpose to transform lives and how they’re successfully achieving this goal. Through their various projects and activities, they’ve empowered an enormous amount of people who, in turn, have managed to secure income. These income earners can now manage their business successfully via mobile platforms. Safaricom is also assisting mobile users with managing their data costs. They have introduced real time refunds for all dropped calls, they’re actively delivering on 4G networks to over 30 counties in Kenya and they’re even helping refugees gain access to food. So, Safaricom has helped boost the economy of Kenya enormously.
How did Safaricom get all of this right?
They have achieved all of this success by harnessing the power of mobile in Africa. M-Pesa has become an ideal way to address the working community’s need to send money home to their families in rural villages. It’s a more cost-effective solution than traditional methods used previously. Also, Safaricom introduced M-Pesa quite suddenly into the marketplace straight after the country went through the turmoil of post-election violence in 2008. Kenyans in the inner cities couldn’t access cash from the banks during this time and so mobile transfers became a life-saver option. Once the strife and conflict were over, the Kenyan people continue using the mobile platform and so was born a giant m-commerce business. So, timing plays a big role but the company has continued to succeed through the investment it has received and through initiatives such as iHub in Nairobi which connects people to the likes of M-Pesa. iHub focuses on nurturing young, tech-savvy adults. It offers consulting services to any young professionals looking to enter into the e-commerce or m-commerce fields.
Safaricom is an excellent example of the power of innovative technology in Africa. If more innovative ventures are harnessed and funding is made available to stabilise these initiatives, African countries will reach unprecedented success. To find out more about the growth of technology in Africa join us at AfricArena 2017. It’s a conference that will unpack all of Africa’s prospects and current successes.