Safaricom turns to insider to drive M-Pesa growth


Safaricom #ticker:SCOM has turned to a veteran insider Sitoyo Lopokoiyit to drive its M-Pesa growth as mobile money services face regulatory and competition headwinds.

The operator said Friday it had appointed the long serving executive as its new director for financial services from March 2018.

Mr  Lopokoiyit takes up the assignment at a turbulent moment with market analysts warning that the entry of commercial banks in the mobile money business and the impact of a gaming tax imposed on betting firms effective January are likely to eat into Safaricom’s M-Pesa earnings.

Safaricom announced a 9.5 per cent increase in after tax profit to Sh26.2 billion for the six months ended September 30.

M-Pesa revenue grew by 16.2 per cent to Sh30.05 billion in the period, while data income rose from Sh13.4 billion to Sh17.55 billion. Voice revenue, which is still Safaricom’s biggest income stream, grew from Sh45.7 billion to Sh47.35 billion in the period.

But M-Pesa’s position as the leading cash transfer service is also set to face a new challenge with the launch of mobile money interoperability, which will see users send and receive money across networks in real time.

The cross-network transfers will be limited to Airtel and Safaricom employees in the pilot phase.

Citi analysts said recently Safaricom’s M-Pesa revenue could face headwinds arising from subdued private sector growth and the launch of new mobile payment products.

“…divergence of share of growth in mobile payments in favour of platforms launched by banks, structural migration to cashless transactions are some of the downside risks to M-Pesa revenue growth in the short term,” said the analysts. “We think M-Pesa’s growth going forward will be somewhat challenged by the banks, which are taking share in faster growing mobile-payments,” added the analysts.