Kenya’s mobile banking pioneer to expand into money management

Photographer: Waldo Swiegers / Bloomberg

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The pioneer of a mobile banking revolution in sub-Saharan Africa is in talks with financial service providers about expanding their 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 series of savings and wealth management products based on mobile phones, CEO Peter Ndegwa said in an interview in Nairobi, the Kenyan capital. . It will seek approval from the central bank for the products over the next year and a half, he said, declining to elaborate.

“We want our clients sensation they have a channel that they can use to access the products that are on the market, ”said the CEO.

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

M-Pesa’s revenue is expected to continue rising even as voice revenue growth rates are likely to decline to single digits over the next three years, according to Ndegwa.

The virus is accelerating the race of mobile banking pioneers to replace cash

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

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

Safaricom, which announced plans to bid for one of Ethiopia’s two telecommunications licenses at stake, is reviewing bidding documents the neighboring state sent to interested companies last week, Ndegwa said. The Ethiopian government has refused to allow the immediate introduction of M-Pesa or similar platforms by companies that obtain the coveted permits.

“There are things we want to do well,” he said. “One is the mobile money license. At the moment it is not clear when it will open, although the government has said within three years ”.

While Ndegwa does not expect the company to make “a lot of money” during the first five years of its investment in Ethiopia, the Horn of Africa market, which has the second largest population in Africa, would be a “significant growth engine” if Safaricom win a license, he said.