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May 1, 2008updated 04 Apr 2017 4:18pm

Vodafone builds on its success

UK mobile communications company Vodafones M-Pesa mobile money transfer service, which has been a success in Kenya, has been adapted for use in another country where the vast majority of people have no access to formal banking services Afghanistan Branded M-Paisa, the short message service-based product has been launched in partnership with the countrys largest mobile phone service provider, Roshan The launch of M-Paisa in Afghanistan is an important step forward in Vodafones international roll-out of its money transfer service, said Vodafone partner markets CEO Hatem Dowidar

By EPI editorial

UK mobile communications company Vodafone’s M-Pesa mobile money transfer service, which has been a success in Kenya, has been adapted for use in another country where the vast majority of people have no access to formal banking services – Afghanistan. Branded M-Paisa, the short message service-based product has been launched in partnership with the country’s largest mobile phone service provider, Roshan.

“The launch of M-Paisa in Afghanistan is an important step forward in Vodafone’s international roll-out of its money transfer service,” said Vodafone partner markets CEO Hatem Dowidar. He added that, as Vodafone has always envisaged with its money transfer services, products for each market are developed according to the requirements of that country, and the Afghan service will have a significantly different focus from the Kenyan version.

Initially, M-Paisa will act mainly as a vehicle for micro-finance institutions’ loan disbursements and repayments, with an additional range of business applications such as salary disbursement and airtime distribution. Person-to-person money transfers will be available from the outset.

Extending reach

In addition, Roshan and Vodafone are testing interactive voice recognition services which, when launched later in the year, will enable greater use of M-Paisa by consumers who might otherwise be excluded due to Afghanistan’s high illiteracy rates. “Our trialling of an interactive voice recognition system means that financial services can be brought to people across the world regardless of their social circumstances,” said Dowidar.

Afghan bank The First MicroFinanceBank has begun using M-Paisa to disburse funds and accept loan repayments, while international micro-finance organisation the Foundation for International Community Assistance is running trials.

“The benefits of mobile money transfer are particularly relevant in a developing market such as Afghanistan, where the large majority of the population does not have access to traditional banking services,” said Roshan’s CEO, Karim Khoja. He added that the challenge of providing timely and reliable payments in a country requiring major infrastructure development is significant and that the M-Paisa service will provide “the backbone” of the country’s money transfer system.

According to Roshan, its mobile service has 1.7 million subscribers and has a geographical coverage capable of reaching 40 percent of Afghanistan’s population of about 32 million people. Roshan is a joint venture between international aid organisation the Aga Khan Fund for Economic Development (its majority shareholder), Monaco-based mobile communications service provider Monaco Telecom, and TeliaSonera, a supplier of telecommunications services in the Nordic and Baltic regions.

Growing customer base

In Kenya, which also has a population of about 32 million, the M-Pesa service has received solid support. Vodafone announced in early February that since the launch of M-Pesa in March 2007 in collaboration with Kenyan mobile phone service provider Safaricom, 1.6 million people have registered as customers and an additional 200,000 customers are being added every month.

Vodafone has a 40 percent stake in Safaricom, the balance being owned by landline and wireless service provider Telkom Kenya, in which French communications company France Télécom holds a 51 percent stake acquired in late 2007.

Commenting, Safaricom CEO Michael Joseph said: “M-Pesa is a service designed to meet the core needs of our customers in an emerging market. The fact that it has had a strong take-up in such a short time demonstrates its potential to drive positive change.”

M-Pesa is used for personal money transfers with an average value of €30 ($44). Companies also use the service. For example, Safaricom pays casual workers and has distributed 40,000 cash prizes to its subscribers using M-Pesa. Certain small businesses, such as taxi drivers and grocers, also accept M-Pesa as a means of payment.

M-Pesa facilitates money transfers up to a maximum of KES35,000 ($500) while minimum transfers are KES100. Transfers between registered M-Pesa customers cost KES30 irrespective of the amount transferred, while tariffs for transfers to non-M-Pesa customers range from KES75 to KES400.

“During the course of this year we plan to continue to extend of the uses of the service in Kenya and seek new markets where the benefits of mobile money transfer can be used to assist people in sending funds safely and securely,” said Vodafone’s head of international payments, Nick Hughes. Potential new services include Safaricom, water and electricity billpay and pension payments.

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