Expanding Electronic PrePay Top-Up Availability in South Africa

South Africa based, Psitek has launched Kazang - a solution that takes electronic prepaid services to previously under-serviced communities in the country. Kazang is being built on the back of the existing successful Psitek payphone solutions, which operate using cellular technology.

Providing quick and easy access to prepaid services in South Africa, Kazang is located at outlets such as township spaza or tuck shops, phone shops or retail centres - giving people access to a variety of services wherever they may be.

One of the key advantages of Kazang is that it enables vendors, who up until recently could only sell vouchers or scratch cards, to now conduct this business electronically. Electronic airtime selling is convenient, easy-to-use and safe (as there is never the risk of vouchers or scratch cards being lost or stolen). Currently, Kazang supplies airtime recharge for the MTN, Cell C, Vodacom and Telkom networks.

Over the past two months, Psitek has built up a fast expanding network of Kazang Super Dealers, who are the Kazang distributors and act as the middle man between Psitek and Kazang Vendors. The National Independent Telecommunications Organisation of South Africa (Nitosa) has become part of this network and is set to roll out several thousand Kazang devices across South Africa over the next few months.

Ian Harrison, Managing Director of Psitek, explains Psitek's goal within the prepaid market in South Africa, which is immense with even further potential. "Industry statistics show that there are currently more than 15 million cell phones in South Africa, a number that is expected to increase to 21 million cell phones in 2008. A massive 90% of the cell phone airtime is prepaid, which reveals the vast potential for the sale of airtime and other prepaid services," Harrison says. "There is approximately R2.5 billion airtime sales per month. We are striving to capture 10% of this market, with a major emphasis on previously under serviced communities."

Backing this is research firm BMI-TechKnowledge, which has reported that revenue generated last year in the South African telecommunications sector stood at R103 billion, which is 6% of the country's R1.65 trillion gross domestic product (GDP). The research firm predicts that the telecommunications market will reach R140 billion by 2011, or a compound annual growth rate (CAGR) for mobile and fixed-line revenue of 8%.

Roll out of further, more diverse prepaid services

However, Kazang is not only about airtime, it is about prepaid solutions as a whole and, thanks to its advanced back-end technology, Kazang will soon roll out other services, such as prepaid electricity, insurance top-ups, bill payments and money transfers. This will make the vendor a one-stop-shop for the selling of a variety of services.

"Convenient access to a diverse range of prepaid services will add huge value to the lives of a lot of South Africans," Harrison contends. "In South Africa prepaid services are ideal for people who have an irregular income and no bank account, who make cash purchases and want immediate access to services the moment they need them. We believe Kazang is the practical and street smart answer to the requirements of this market."

As an end-to-end solution, Kazang includes the robust device, a reliable and scalable technology platform called Content Ready, the prepaid services, a marketing start-up kit and ongoing support services. The marketing pack assists Kazang Vendors with setting up their Kazang business easily and quickly, and includes a vendor booklet, a practical, step-by-step start-up guide, as well as promotional material in the form of a poster and signage.

Entrepreneurial business opportunities

Kazang is creating job opportunities in the informal sector. "The roll out of Kazang offers numerous entrepreneurial business opportunities to people with the necessary technical and management skills operating in previously under-serviced communities," says Harrison. "The selling of services can enable the entrepreneur to develop a sustainable and independent business".

The typical Kazang business has four players - Psitek, the Super Dealer, the vendor and of course the consumer. Through a process of down-stream clipping, the vendor receives the largest slice of the commission.

Psitek believes that one of the previous barriers to entry into under serviced communities was a lack of understanding of this market. "Our 17 years of experience, and in particular our experience in supervised payphones, has enabled us to build up an in-depth understanding of the requirements of the South African, and other similar, market conditions, and slowly but surely develop networks within these communities."

Another barrier to entry appears to have been the cost of entry into the market, in particular the cost of devices. However, Kazang is distributed with an affordable financial model that helps people to build up sustainable businesses and empowers them; the device itself is heavily subsidised.

Kazang is certainly set to make an impressive footprint in South Africa's under-serviced areas over the next months. This will render it a highly desirable delivery channel for content and service providers that could not previously reach this market. Psitek South Africa is in negotiations with such companies to drive the roll out of these services.

Posted to the site on 3rd January 2008