WeChat social communication platform owned by Chinese Tencent, has planned business expansion in Africa. The company plans to introduce similar service profile in the region consisting of medical appointment booking, fund transfer and stock market investment, as it has in China. Currently, WeChat has partnered with African pay TV player MultiChoice owned by Naspers for voting services in the continent. It also allows users to stream South African internet radio station CliffCentral and access its daily polls and chat groups. Other associations of the company include delivery business Picup and job search platform M4JAM. Cross border remittance market is quite strong in Africa and majority of the population is unbanked. In order to target this user base, it has ventured into mobile financial services segment with the launch of mobile wallet, WeChat Wallet last year in association with South African lender Standard Bank.

1. China based WeChat targets business expansion in
Africa; South African mobile P2P transfer market
expected to reach US$ 6.6 billion by 2020
Analyst View Point Series

2. Table of Contents
Market Context
Key Insights
Market Opportunity

3. Market Context
WeChat social communication platform owned by Chinese Tencent, has planned
business expansion in Africa. The company plans to introduce similar service profile in
the region consisting of medical appointment booking, fund transfer and stock market
investment, as it has in China. Currently, WeChat has partnered with African pay TV
player MultiChoice owned by Naspers for voting services in the continent. It also
allows users to stream South African internet radio station CliffCentral and access its
daily polls and chat groups. Other associations of the company include delivery
business Picup and job search platform M4JAM. Cross border remittance market is
quite strong in Africa and majority of the population is unbanked. In order to target this
user base, it has ventured into mobile financial services segment with the launch of
mobile wallet, WeChat Wallet last year in association with South African lender
Standard Bank.

4. Market Opportunity
The mobile wallet is currently available only in South African region but WeChat
plans to expand it to other African countries as well. Mobile P2P transfer market
transaction value was US$ 856 million in 2015 and expected to reach US$ 6,660
million in 2020. From 2014 to 2015, the growth rate achieved was 63.5%, while
expected CAGR from 2016 to 2020 is projected to be 48.5%.

5. Key Insights
While the company has plans for expansion, it faces strong competition from
Facebook owned Whatsapp. It is currently one of the most popular social media
platforms in Africa. User base for Whatsapp is more than 10 million which is double
than that of WeChat. The major reason behind it is simplicity of the platform. It allows
cheaper internet based call and messaging rates which has fueled its acceptance
level. Currently, it is working towards partnering with credit card firms, retail joints and
airlines to generate revenue bycustomer contacting service in respective segments.
WeChat has a much slower adoption rate as it is more complex. It provides much
more services than calling and messaging. Moreover, it had been introduced later in
the market and is not supported by low end smartphones due to its complexity. Hence,
consumer awareness level is also low.

6. Key Insights
Currently, WeChat is focusing on increasing user base in Africa rather than revenue
generation by leveraging itself as one stop solution for mobile services. Despite facing
tough competition from Whatsapp, it plans to attract customers through its additional
service line.

7. To Know More
To know more and gain deeper understanding of
mobile payment industry in South Africa, click here.