Vodacom SA, Old Mutual to offer personal loans

Telecoms operator Vodacom is expanding its lending business to now offer personal loans in South Africa of up to 250,000 rand (US$13,600) through a partnership with credit provider Old Mutual Finance.

Vodacom made the announcement, saying it would provide "a responsible credit solution" for South Africans who might need to secure extra funds in a tough economic climate.

"We understand that the high cost of living and other economic pressures are taking their toll on consumers. Through VodaLend Personal Loans, we are offering an accessible, trusted and reliable financial solution backed by a reputable partner, which can support customers in achieving their personal goals and financial well-being," said Mariam Cassim, CEO of Vodacom financial and digital lifestyle services.

Vodacom said customers can apply for a loan online and will be notified of provisional approval within minutes of submitting all the required documentation. Approved customers will then receive the funds directly into their bank account within 24 hours of concluding the loan agreements.

The offer is available to both Vodacom and non-Vodacom customers and includes a digital solution to view and manage their loan accounts.

"This integrated partnership with Vodacom will ensure that consumers' interaction with both brands is simple, convenient, and tailored to their specific financial needs. At Old Mutual, we offer our customers a variety of origination channels and platforms for personal loans, therefore, partnering with Vodacom allows us to further expand both our footprint and digital reach," Old Mutual Finance CEO Andre Keller said about the partnership.

Keller said that Old Mutual's aim is to make borrowing accessible and easy to understand while ensuring it remains a responsible lender by providing consumers with financial education tools.

The National Credit Regulator's Consumer Credit Report for Q1 2023 highlighted that loan advances from non-banking institutions had increased to 9.3% from 8% at the end of 2022, reflecting the shift by consumers to non-traditional financial service providers.

Lending business grows

This is not Vodacom's first foray into the lending market.

Since November 2019, Vodacom SA has been offering business financing for small- to medium-sized businesses though VodaLend Business Advance which gives financing of between R10,000 ($544) and R1.5 million ($81,611) and is repayable over six to 12 months.

The operator has been giving out micro-loans for airtime through its successful Airtime Advance product for many years, and it advanced R12.8 billion ($696.4 million) worth of airtime during the financial year ended March 31, 2023.

In April 2021, Vodacom launched Voucher Advance which allows South African customers to get advances for consumer goods.

Mariam Cassim, CEO of Vodacom financial and digital lifestyle services. (Source: Vodacom)

In October 2021, it also rolled out "super app" VodaPay in South Africa – the app combines digital shopping, lifestyle and financial services on one platform for both consumers and businesses.

In September 2022, the operator launched a cash advance product aimed at SA's underbanked consumers, offering small-scale loans of between R50 ($2.70) and R500 ($27), with the option to pay it back over seven, 14, 21 or 28 days.

Mobile financial services grow across Africa

Vodacom and Safaricom joint venture M-Pesa has also seen success from nano-loans product Fuliza in Kenya and a similar product in Tanzania called Songesha. Loans granted via Songesha in Tanzania more than doubled to R8.2 billion ($446 million) in the financial year ended March 31, 2023.

Vodacom Group operates across South Africa, the Democratic Republic of Congo (DRC), Lesotho, Mozambique, Tanzania and Egypt, and is a part owner of Safaricom in Kenya and Ethiopia.

At the end of March 2023, Vodacom had 70.6 million customers (including Safaricom) using a financial service product and $1 billion was processed each day on mobile money platform M-Pesa.

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"Our partnership with Old Mutual is another exciting step in expanding our financial ecosystem and building on our other digital offerings, such as VodaSure Insurance, VodaLend Compare and VodaLend Cash Advance. By providing more customers with access to financial services, we are fostering financial inclusivity on a broader scale, which has the potential to accelerate economic growth and transform lives," concluded Cassim.

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*Top image source: drobotdean on Freepik.

— Paula Gilbert, Editor, Connecting Africa