Device financing: Unlocking economic opportunity in South Africa

26 April 2024

In South Africa, as in many developing nations, access to digital technology remains a hurdle for a large segment of the population, with only 44% owning smartphones in 2023. This stark statistic widens the digital divide, particularly as a result of device affordability issues, limiting South Africa’s full participation in the modern economy. 

The country’s ongoing migration to 4G networks aims to impend 3G and 2G networks by December 2027. Consumers are therefore required to upgrade their devices to those compatible with 4G networks, which can be prohibitively expensive for many individuals and households, particularly those already facing financial constraint. This requires targeted initiatives like device financing to address smartphone access and affordability. “South Africans are leveraging financial inclusion education to embrace improved consumer lending practices, effectively navigating economic challenges by positively utilising credit products and prudently managing debt, leading to recorded improvements in credit scores,” as stated in the TransUnion Credit Landscape report of 2023,which creates an opportunity for successfully rolling out device financing initiatives and addressing the smartphone access gap.

MTN South Africa partnered with the FoneYam device financing programme in 2023, with MTN capturing 37% of device sales through the FoneYam initiative at Pep (a South African low-cost retailer). FoneYam introduces flexible financing options tailored to the needs of low-income consumers ranging from instalment payments spread over flexible periods, with minimal or no interest, making devices more accessible without imposing a significant financial burden on consumers. MTN South Africa plans to partner with co-financing partners to add value to the consumer to increase uptake and promote our customer relationship.

Device financing solutions play a crucial role in narrowing South Africa’s digital divide by addressing affordability issues. These initiatives empower individuals to fully participate in the modern economy, leading to improved connectivity, expanded educational and job opportunities, and enhanced social inclusion. Continued investment in sustainable device financing programmes is key to driving economic growth and societal advancement in South Africa’s digital transformation journey. “Before I got help to buy a phone, I felt a bit left out because I couldn’t afford one. But now, I have the internet all the time, which has changed everything. I can talk to my family whenever I want, look for jobs online and even learn new things. It feels like a whole new world has opened up for me, and I’m really thankful for that.”