Vodafone unit to stop mobile-banking product in South Africa

Vodafone Group Plc’s South African unit Vodacom Group Ltd. will stop offering its mobile-banking product M-Pesa in the country as the strength of the banking system means fewer customers are taking up the service than in other sub-Saharan African markets.

“The business sustainability of M-Pesa is predicated on achieving a critical mass of users,” Chief Executive Officer Shameel Joosub said in an e-mailed statement on Monday. “Based on our revised projections and high levels of financial inclusion in South Africa there is little prospect of the M-Pesa product achieving this in its current format in the mid-term.”

Vodafone developed M-Pesa a decade ago as way for African customers to pay for services without cash in parts of the continent where banks are scarce, adding a new revenue stream for Johannesburg-based Vodacom and Kenyan operator Safaricom Ltd. Vodacom is keeping the service in Tanzania, Mozambique, the Democratic Republic of Congo and Lesotho, where demand for the product continues to grow, Joosub said.

M-Pesa, which means money in Swahili, had more 25 million customers in 11 countries at the end of March, a 27 percent increase on the previous year. The South Africa service will be stopped at the end of June.