Safaricom eyes loans market with its new savings e-wallet


The region’s biggest telco Safaricom last month launched a pilot run for its savings product Mali, a service that allows M-Pesa users save and invest from as little as Sh100, with returns of up to 10 per cent annually.

Safaricom acting CEO Michael Joseph said the firm had completed testing the new product.

The pilot for Mali is restricted to a select few and Safaricom is yet to announce when the service will fully be available to consumers.

“Mali was and is a trial with only Safaricom staff and a few customers. It has now been completed and we are yet to decide whether to launch it or not, with the requisite approvals,” Mr Joseph said late last year.

Mali, a Swahili name for wealth, has capped savings at Sh70,000 per user. The launch of the new platform capped 2019 for Kenya’s largest telecommunications service provider and points to an even more disruptive 2020 where the firm is expected to make more inroads in the financial services and postal sectors.

The piloting of Mali comes hot in the heels of the firm’s recent launch of M-Post in partnership with the Postal Corporation of Kenya (PCK).

M-Post is tipped to revive the ailing postal sector and boost the country’s e-commerce sector.

M-Post allows subscribers to use their mobile phone numbers as digital addresses where they receive notifications from PCK about their letters or parcels directly to their mobile phones.

“Today we have 450,000 physical post office boxes across the country and with 45 million mobile subscribers there is massive opportunity to expand this footprint through M-Post,” said Post Master General and PCK boss Dan Kagwe,

Subscribers will pay PCK Sh300 annually for the service that will also give them the option of selecting which post office to pick their deliveries from, with PCK looking to roll out five million digital post office boxes across the country.

PCK anticipates to net Sh1.5 billion annually compared to the current Sh900 million in revenues it collects from charging Sh2,000 annually on each of the physical post office boxes.

Safaricom will be earning a slice of the revenues in the form of transaction fees charged to consumers.

“Posta’s logistical capabilities and Post Office branch network are well placed to meet this shift,” said Safaricom chief executive in a statement.

“We are therefore coming together to create value for our customers by empowering them to conveniently and affordably receive parcels and goods wherever they may be across the country.”

The deal is likely to give a boost to e-commerce service providers in the country who have in the past cited the lack of a proper addressing system as an impediment to growth in the sector.

Earlier this year, CitiBank estimated that Kenya’s e-commerce market could be worth up to Sh5 billion in the long term.

“We estimate e-commerce market size could reach (Sh700 million) in the near term, assuming average revenue per user and user penetration levels comparable to India, and (Sh4 billion to Sh5 billion) in the longer term, assuming penetration level comparable to China.”

The rollout of M-Post will be significant for Safaricom, particularly with respect to growing its e-commerce platform Masoko and turning it profitable.

E-commerce has been a difficult market to crack for service providers with global firms repeatedly bowing out, prompted by unsustainable operational costs and thin margins.

Last November, e-commerce site Jumia revealed it would be laying off a third of its workforce and outsource its travel listing site Jumia Travel to Travelstart after exiting Tanzania, Cameroon and Rwanda. Safaricom will be banking on the infrastructure provided by PCK, which has over 600 post offices to drive uptake of M-Post.

However, the success Safaricom’s Fuliza launched a year ago, has given the company fresh impetus to invest in growing its share of the financial services and e-commerce sector.

Last November, the company reported that Kenyans borrowed Sh140 billion in the first nine months of the Fuliza roll-out.

Fuliza is an overdraft facility introduced on M-Pesa that allows consumers to borrow additional funds to complete M-Pesa transactions.

The service has proven popular with M-Pesa users, and a report from Sterling Capital last year projected that M-Pesa customers will have borrowed Sh200 billion from Fuliza by December 2019, generating Sh21 billion in revenues and roping in two million new M-Pesa subscribers for the telco.

According to the report, Fuliza will cement Safaricom’s lead in the digital payments sector, at the same time claw back market share in other traditional lending markets.

“Fuliza will have a positive impact on M-Pesa transactional volumes, revenues, customer acquisition as well as retention,” stated the investment firm in its report. “We also see it changing the competitive landscape with regards to mobile and digital payments.”

It added: “We see a 14.5 per cent growth in M-Pesa revenues for the 2018-19 financial year to Sh72 billion and Sh82.3 billion in the 2019-20 financial year, driven by growth in customer money transfer transactions, payments and fees and commissions from strategic business partnerships such as KCB M-Pesa, M-Shwari and Fuliza.”