Kenya’s Mobile-Banking Pioneer to Expand into Money Management

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The pioneer of a mobile-banking revolution in sub-Saharan Africa is in talks with financial-services providers about expanding its offerings over the next five years, as it seeks to emulate the success of Ant Group’s Alipay.

Safaricom Plc. is in negotiations with fund managers, investment banks and insurance companies to partner on a raft of mobile phone-based savings and wealth-management products, Chief Executive Officer Peter Ndegwa said in an interview in Nairobi, Kenya’s capital. It will seek approval from the central bank for the products over the next 1-1/2 years, he said, declining to give more details.

“We want our customers to feel they have a channel they can use to access products that are in the market,” the CEO said.

East Africa’s biggest company by market value is plotting the evolution of its mobile-money payments platform M-Pesa, which allows its 27 million customers to transact without smartphones. Since Safaricom started the service in 2007, mobile-money has become an indispensable part of how Africa’s 1.2 billion people pay for goods and services, buy funeral cover or borrow money.

Income from M-Pesa is expected to continue rising even as voice revenue-growth rates probably slow to single digits over the next three years, according to Ndegwa.

During the Covid-19 pandemic, Kenyans increased their use of the M-Pesa platform that Safaricom owns jointly with parent Vodacom Group Ltd. Phone wallet sizes swelled by 35% in the first half of this year as people turned to cashless transactions during the lockdown, Ndegwa said.

Kenyan lenders KCB Group Ltd and NCBA Group Plc already have savings and loan products on M-Pesa.

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Safaricom, which has announced plans to bid for one of two Ethiopian telecommunication licenses that are up for grabs, is reviewing tender documents that the neighboring state sent out to interested companies last week, Ndegwa said. Ethiopia’s government has refused to allow the immediate introduction of M-Pesa or similar platforms by the companies that bag the coveted permits.

“There are things we want to get right,” he said. “One is the mobile-money license. At the moment it is not clear at what point it will be opened up, although the government has said within three years.”

While Ndegwa doesn’t expect the company will make “a lot of money” during the first five years of its Ethiopian investment, the Horn of Africa market, which has Africa’s second-biggest population, would be a “significant growth driver” should Safaricom win a license, he said.

©2020 Bloomberg L.P.

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