Vodacom partners with Alibaba to provide new e-commerce solutions

Vodacom Group Ltd has announced a partnership with Alibaba as it continues with its plan to expand its financial and e-commerce services in South Africa. With access to AliPay, Vodacom will challenge banks and accelerate growth and provide consumers and merchants with an alternative financial service based on the broadband spectrum.

As one of the country’s largest wireless carriers, Vodacom has taken the leap to develop what they are calling a “super-app” with the assistance of the Alibaba Group Holding Ltd company. The app will allow users to apply for loans and shop online as well as make basic payments.

While the super-app will only be available to South Africans, Vodacom’s Kenyan partner Safaricom Plc will be replicating this push into e-commerce. Kenya’s M-Pesa mobile-money service accounts for a third of revenue and supports advancements into online retail and financial services.

“It will be quite transformational for the South African landscape and, in the future, for the M-Pesa landscape as well” said Vodacom CEO Shameel Joosub.

Other large mobile operators in the country have also invested heavily in financial technology to fill gaps left by a volatile banking infrastructure. For example, MTN is planning to carve out and possibly list its financial-services business and Airtel Africa Plc is considering a similar course of action.

Vodafone Group Plc owns majority shares in Vodacom and supports the mobile phone and broadband provider’s strategy to expand its financial technology offering in South Africa. However, the launch process has been slowed down by legal action taken by Vodacom’s competitors, MTN Group Ltd and Telkom SA SOC Ltd, who are objecting the conduct of the sale of the app.

Many have considered this new financial service as a competitive move that challenges South African banks. But according to Joosub, Vodacom has to partner with a bank to ensure the success of the super-app, so he doesn't necessarily see the move as a competitive one.