If Safaricom, Kenya’s largest telecommunication operator, fully implements its latest innovation, then banks in Kenya are in for a serious battle. Safaricom is testing a new mobile savings service that will enable Kenyans to save much of their money online, off banks. Simply put, banks may still be the slave collecting physical deposits while Safaricom would be swallowing the deposits. Its implication is that if it scales, Kenyans may pour all their savings into it for fixed and attractive interests, thereby shunning banks which do not often give out any interests for savings.
“If it comes on board, it will be a game changer to the ordinary Kenyan. It should do well for their returns,” said Lisa Kimathi, an investment analyst at Standard Investment Bank.
Here Is All You Need To Know
- Kenya’s leading telecoms operator Safaricom SCOM.NR said it was testing a new mobile savings service, dubbed “Mali” (Kiswahili for wealth), in a bid to broaden Safaricom’s successful M-Pesa mobile money platform.
- Mali, which will be capped at 70,000 shillings ($690) per saver, will offer an interest rate of 10% per year, higher than that offered by commercial banks, the Business Daily newspaper reported.
- Safaricom confirmed it was testing a savings product called Mali, but did not comment on the other details in the newspaper report.
- Policymakers say the East African nation suffers from a low national savings rate and analysts said Safaricom could be looking to target that untapped market with the new product,
Safaricom Already Has One of East Africa’s Biggest Mobile Money Platforms— M-Pesa
M-Pesa, which allows users to send and receive cash, and pay for goods and services even on basic feature phones, has powered Safaricom’s earnings in recent years.
The active user base of M–Pesa has grown from approximately 1 million active users in 2007 to 33.4 million active users in 2018. This amounts to 37% in compounded annual growth rate.
Read also: Kenya’s Biggest Telecom Operator Safaricom Starts Digital Postal Services For Its Ecommerce Business
During the company’s first half to the end of September, M-Pesa revenues grew by 18% to 41.97 billion shillings, with the number of users standing at 23.6 million.
Safaricom, part owned by Vodacom VODJ.J and Britain’s Vodafone VOD.L, already runs an overdraft facility on M-Pesa called Fuliza and it has savings services in conjunction with two banks — KCB Group KCB.NR and NCBA Group NCBA.NR, which offer lower interest rates to depositors.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world