South Africa, the continent’s economic powerhouse, is about to witness a showdown in its remittance sector as telecom giants Vodacom and MTN vie for dominance.

With South Africa’s GDP projected to hit $408.71 billion at the  end of 2023, and domestic remittances ranging between $11 billion and $13 billion, approximately 4% of the country’s GDP, the stakes are high in this lucrative market.

Fitch Solution, a unit of Fitch Group, predicts that Vodacom is poised to enter the South African remittance scene, leveraging competitive pricing to challenge existing players.

In a statement, Fitch Solution noted, “Vodacom may enter the South African remittance market and compete on lower fees.”

This move puts Vodacom on a direct collision course with MTN, already a major player in the market with its MoMo mobile money digital solution.

MTN, boasting 61 million monthly active mobile money users across 16 markets, has established a formidable presence. In contrast, Vodacom and Safaricom’s M-Pesa collectively boast over 52 million subscribers across seven countries.

While MTN initially launched its mobile money platform in 2012 but withdrew in 2016 due to commercial viability concerns, it re-entered the market in 2020. Now, with 9 million registered users, MTN offers diverse financial services beyond remittances.

Vodacom has followed a similar strategy, providing financial services like loans for airtime and an e-commerce platform through its VodaPay app.

MTN’s strategy to attract more users involves eliminating fees on the sale of digital goods, such as airtime and electricity. Meanwhile, Vodacom may position itself as the go-to option for cost-conscious consumers seeking affordable remittance solutions.

South Africa currently sees an estimated $1.2 billion leaving its borders annually in remittances, emphasizing the significance of cross-border financial transactions. In comparison, Nigeria experiences a substantial $18.6 billion influx from the diaspora.

Jabulani Debedu, Principal Consultant and Tourism Specialist at BDO SA, highlighted the vital role of cross-border remittances in many African countries, emphasizing their reliance on diaspora payments. As the battle for dominance in South Africa’s remittance market unfolds, consumers can anticipate competitive offerings and potentially improved services from Vodacom and MTN.