Vodafone, Microsoft partner to move M-Pesa to the cloud

Vodafone and Microsoft have announced a new ten-year strategic partnership across Europe and Africa, which includes Microsoft helping to scale mobile financial services platform M-Pesa by housing it on its cloud platform Azure and enabling the launch of new cloud-native applications.

Under the far-reaching deal, Vodafone will invest US$1.5 billion over the next ten years in cloud and customer-focused artificial intelligence (AI) services developed in conjunction with Microsoft.

Additionally, Microsoft will use Vodafone's fixed and mobile connectivity services and invest in Vodafone's managed Internet of Things (IoT) connectivity platform.

The partnership also promises to transform Vodafone's customer experience using Microsoft's generative AI, as well as hyperscale Vodafone's managed IoT connectivity platform, develop new digital and financial services for businesses, particularly small and medium-sized enterprises (SMEs) across Europe and Africa, and overhaul its global data center cloud strategy.

"Today, Vodafone has made a bold commitment to the digital future of Europe and Africa. This unique strategic partnership with Microsoft will accelerate the digital transformation of our business customers, particularly small and medium-sized companies, and step up the quality of customer experience for consumers," Vodafone Group CEO Margherita Della Valle said in a statement.

Africa digital acceleration plans

In the African market, a specific "purpose-led program" aims to reach 100 million consumers and 1 million SMEs across the continent.

Vodafone said the goal is to enhance digital literacy, skilling and youth outreach programs, as well as offer digital services to the underserved SME market.

The partnership aims to boost financial services innovation, building a community of certified developers.

In October 2023, Microsoft also announced a partnership with M-Pesa Africa to supply digital skills development for African micro, small and medium enterprises (MSMEs) across Kenya, Lesotho, Mozambique, the Democratic Republic of Congo (DRC) and Tanzania.

M-Pesa will soon be housed in Microsoft's cloud platform Azure with plans for new cloud-native applications on the mobile financial services platform. (Source: Philip Mostert for Vodafone Group)

Kenyan operator Safaricom (partially owned by Vodafone) launched mobile money offering M-Pesa back in 2007, and over the years it has evolved into a highly successful mobile financial services platform.

As of January 2024, M-Pesa now connects more than 60 million customers and more than and 5 million businesses across eight countries, processing over $1 billion in value per day.

Vodafone said today's partnership will expand and further scale M-Pesa to improve financial inclusion across Africa, seemingly through moving it into the cloud and launching new cloud-native applications, with not much more detail given.

Generative AI agenda

The digital services created by the new Vodafone-Microsoft partnership will use generative AI technology to provide a personalized and differentiated customer experience across multiple channels, the operator said.

It also promised to be built on "unbiased and ethical privacy and security policies" under Vodafone's established framework for responsible AI.

Under the partnership, Azure OpenAI will be deployed "across all Vodafone customer touchpoints" including digital assistant TOBi, which the operator originally built with IBM's Watson technology.

Azure OpenAI is a suite of language models developed by OpenAI – the company that created ChatGPT – in collaboration with Microsoft, which is a major investor in OpenAI.

Vodafone employees will also be able to use the AI capabilities of Microsoft Copilot "to transform working practices, boost productivity and improve digital efficiency."

"This new generation of AI will unlock massive new opportunities for every organisation and every industry around the world," Microsoft Chairman and CEO Satya Nadella said in a statement about the Vodafone partnership.

Investing in IoT

Microsoft also intends to invest in Vodafone's managed IoT connectivity platform, which will become a separate, standalone business by April 2024.

The platform already connects 175 million devices and platforms worldwide, and with Microsoft's backing it hopes to expand the platform to connect more devices, vehicles and machines, and attract new partners and customers.

Vodafone also plans to become part of the Azure ecosystem, making the IoT platform available to a wider developer and third-party community using open APIs.

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Nadella said Microsoft and Vodafone will together apply the latest cloud and AI technology to enhance the customer experience of hundreds of millions of people and businesses across Africa and Europe, build new products and services and accelerate Vodafone's transition to the cloud.

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*Top image source: rawpixel.com on Freepik.

— Paula Gilbert, Editor, Connecting Africa