Why M-Pesa could not gain traction in South Africa

M-Pesa, one of the most successful innovations in Kenya could not gain traction in South Africa (SA).

It remained an enigma until I visited ShopRite, a SA supermarket in Zululand. Shoprite once tried unsuccessfully to get into the Kenyan market.

Could Shaka Zulu’s strategy have worked in getting SA brands to the rest of Africa, attacking from flanks, not directly?

How much do South African brands adapt to the local markets, part of attacking from the flanks? A good example, Shoprite seemed to have remained South African in culture and layout despite entry into the Kenyan market.   

A signboard next to the cashier in a ShopRite supermarket gave me insight into why M-Pesa could not gain traction there.

The services offered through M-Pesa were already on offer through banks and supermarkets. SA banks are leaders in Africa, in depth and experience.

They are one of the pillars of the South African economy. Remember, the Standard Bank of South Africa was in Kenya as early as 1911. SA banks could actualise Cecil Rhodes‘ dream of connecting the Cape to the mouth of the Nile.

The presence of Britons and Afrikaners gave SA a head start in modern services and a beachhead for global brands to fan out into the rest of Africa. How many global firms have SA as their headquarters?

Back to M-Pesa. SA supermarket offers are unprecedented, as the signboard above shows. Why have our supermarkets not done the same and given customers more choices?

The competition with M-Pesa would lead to more efficient and cheaper services. Offering these services in the supermarket market makes economic and social sense. We are always in the supermarkets. SA supermarkets are really super, going beyond food and groceries. 

Think of some unique services offered by SA supermarkets like insurance, power tokens, money transfers and even gambling (lotto). The signboard (pictured) leaves no doubt that our supermarkets need to up their game and give us more value for our money. 

Clearly, M-Pesa filled a gap our banks and supermarkets had left open. Give credit where it’s due, our regulators, like our Central Bank, were foresighted and saw M-Pesa’s potential.

Banks too quickly realised M-Pesa was a tool they could use to their advantage. Can we see AI in the same light?