Safaricom’s push into financial services with a one-stop-shop, M-Pesa super app is set to intensify competition with  traditional banks.

Analysts warn this move could revive the push for the telco to be declared dominant and split into two firms at a time when there is a Bill in Parliament requiring separation of M-Pesa from Safaricom.

The M-Pesa app creates a financial supermarket that over and above the send money, payment and savings features also enables users to pay for insurance and buy train and bus tickets while acting as an app store for developers. 

Financial analyst Eric Osiakwan, managing partner of Chanzo Capital, says a venture and growth capital firm, the launch of the super app by Safaricom has raised the question of whether M-Pesa is transforming into a bank. 

He said the question had led regulators and public policy makers in some countries to require the mobile network operators  to separate their Mobile Money (MoMo) or operations (classified as fintech) from their mainstream voice business.

Unlike banks, mobile network providers like Safaricom are generally able to overcome limits to scale up financial services provision by exploiting network effects.

Some analysts, however, say that the launch of the M-Pesa super app is a good thing for Kenya in terms of financial inclusion. 

“There was a time in Kenya when you could not walk into a bank without a tie.

This is going to offer very healthy competition to banks and will push them to offer better services,” said John Kirimi, a former head of Sterling Capital, brokers for equities and fixed income trading at the Nairobi Securities Exchange 

Digital payments

He added the push to split M-Pesa from Safaricom will not affect the business because the shareholders will still be the same people.

The launch of the M-Pesa app comes two years after announcement by cellulant, a leading one-stop digital payments company in Africa,  that it was launching such an app.

While last May MTN announced similar plans while Vodacom South Africa in April discussed plans to launch a similar app.

This trend shows a new growth frontier that telcos are charting as voice and data revenues mature while mobile money grows in lips and bounds.

According to the results for the year ended March 31, 2021 released, M-Pesa revenues dropped by 2.1 per cent to Sh82.6 billion due to Covid-19 but surpassed voice earnings which narrowed 4.6 per cent to Sh82.55 billion. 

Already M-Pesa is the second most lucrative mobile money service on the continent after MTN group fintech.

M-Pesa transactions in Kenya grew by 32.9 per cent year-on-year to 8.2 trillion in 2020, whilst the volume of M-Pesa transactions grew by 14.9 per cent, to 5.12 billion transactions.

Orange Money and Airtel Money take the third and fourth places respectively.

M-Pesa revenues were six times higher than the digital revenues of Africa’s largest banks.