M-Pesa inks global transfer deal with Onafriq
M-Pesa, Vodacom and Safaricom’s mobile money joint venture has signed a global money transfer agreement with Onafriq, Africa’s largest digital payments network, to boost its remittance efforts on the continent — particularly at its Ethiopia unit.
M-Pesa said the Onafriq deal will streamline remittance flows to Ethiopia. Onafriq operates in 40 African countries.
The agreement enables customers in the Horn of Africa nation to receive remittances from different parts of the world through the mobile payments platform. The remittance service has received authorisation from the National Bank of Ethiopia to start operating in July.
M-Pesa plans to tap into and leverage Onafriq’s extensive network, which connects 500million mobile money wallets and 200-million bank accounts. This vast reach enables domestic and cross-border disbursements and collections, card issuing and processing, agency banking and treasury services.
This new service ties into Ethiopia’s efforts to generate foreign currency inflow through formal channels.
Vodacom continues to invest in Safaricom Ethiopia, launched in October 2022, to reduce its reliance on SA, which generates more than half of total service revenue.
In 2023, the World Bank said the remittance flows to countries in Sub-Saharan Africa reached $54bn. The increase was driven by strong remittance growth in Mozambique, Rwanda and Ethiopia.
Vodacom has operated in the remittance market for years.
A person can, for example, send money through one of the dedicated remittance services such as World Remit from a Standard Bank account in SA to an M-Pesa mobile money account in Kenya. In 2023, Vodacom CEO Shameel Joosub told Business Day that the group was looking to grow that piece of its business.
“We’ve seen the opportunity. We’re doing about $5bn of international money transfers. It is a very big market for us. A lot of the success has been in Kenya. And we’re now trying to expand that to the rest of the markets.”
In September 2023, rival MTN launched a service that allows for the movement of money in more than 10 countries.
At the time, Fitch Solutions predicted that Vodacom would increase its remittance efforts and enter the same market and compete on lower fees.
According to Paul Kavavu, GM of Safaricom Ethiopia: “Our goal is to make payments easier, and the incorporation of international money transfer services into M-Pesa serves that purpose perfectly. Ethiopia generates more than $5bn in remittances annually and this partnership will provide the Ethiopian diaspora with an easy and fast formal channel to send money to their loved ones in Ethiopia.”
Vodacom recently reported that its financial services customers, including Safaricom, now totalled 73.5-million, transacting $1bn a day.
Group financial services revenue rose 31% to R3.4bn, with $98.2bn transacted through its mobile money platforms in the quarter ended December 2023.