Eyeing growth in funeral insurance, small loans

VODACOM Group sees its African financial services business as a cornerstone of growth, as the wireless carrier expands into products such as funeral insurance and loans of as little as $2 (R30).

The unit of the UK’s Vodafone Group uses artificial intelligence and machine learning to customise its financial offering, depending on the different needs of markets ranging from the Democratic Republic of Congo to Mozambique, Vodacom chief executive Shameel Joosub said.

“Our expectations are that we can grow this business segment at those levels for the next few years,” he said.

Nano-loans are growing in popularity Joosub said, with Kenya a particularly big market. Meanwhile funeral cover is popular among South African cultures that traditionally spend relatively large sums on ceremonies.

“With nano-lending we give people $2 or $3 loans, and they pay us back within a few days,” Joosub said. “They can get food when needed, and water, and electricity.”

Mobile financial services have become a significant source of revenue for Africa’s telecom companies, as the continent’s young and growing population take advantage of the growing availability of smartphones to overcome a lack of formal banking infrastructure.

An estimated 84 percent of Africans will have access to a mobile connection within the next five years, according to a report by GSMA, an industry body that represents the interests of mobile network operators worldwide.

The increased use of mobile phones could boost the sub-Saharan Africa economy by as much as $150 billion during the same period, it said.

Vodacom has a target of 20 percent annual growth for financial services over the longer term, as the business stabilises from initial greater jumps off a low base.

Sales from the division gained by 37 percent in the six months to September. The service fees for nano-loans are typically between 5 and 20 percent.

Vodafone is increasingly consolidating African operations under the Vodacom umbrella, and will give management control of its Ghana business to Joosub in April.

Joosub has also been appointed to the executive committee of the UK parent.