M-Pesa grows by leaps and bounds to shore telco profits

Lewis Njoka @LewisNjoka

M-Pesa continues to cement its place as an important business segment for Safaricom with its earnings increasing by 12.6 per cent to Sh84 billion signaling Kenyans’ increasing appetite for loans and savings.

The mobile money platform enables subscribers to transact via phone, save money and borrow loans through its affiliate services namely M-Shwari, KCB M-Pesa and Fuliza.

Safaricom’s 2019/20 financial results released yesterday show that M-Pesa’s contribution to  total revenue rose to 33.6 per cent up from 27 per cent in 2017 placing it almost at par with voice. 

Financial results

In total, the telco’s revenues rose by 4.8 per cent to Sh251.2 billion up from Sh239.8 billion in the last financial year with voice, the company’s largest income earner accounting for 34.5 per cent of revenue.

“This year’s financial results were driven by growth in M-Pesa revenue, which grew by 12.6 per cent contributing 33.6 per cent of the service revenue and mobile data which grew by 12.1 per cent to Sh40.7 billion,” said Safaricom in a statement.

The announcement comes only a few weeks after Safaricom and Vodacom, through a joint venture, gained complete control of the M-Pesa platform from UK’s Vodafone in a Sh1.4 billion deal.

Earlier this month, the two announced they had completed acquiring the M-Pesa brand, product development, and support services.

Safaricom outgoing acting CEO Michael Joseph said the telco had entered into a partnership with Visa to expand the platform’s reach.

“M-Pesa ecosystem continues to expand beyond a payment platform.  The recently announced partnership with Visa will eliminate barriers to global commerce merchants and give M-Pesa customers more opportunities. 

This partnership will benefit more than 22 million M-Pesa customers to make transactions at more than 61 million merchant locations throughout Visa global network,” he said.

M-Pesa’s growth contrasts sharply with the declining earnings for both voice and messaging and partially explains why Safaricom is keen to have total control of the popular mobile money platform. 

The two contributed 34.5 per cent and 6.8 per cent respectively to Safaricom revenue this financial year down from 42.5 per cent and 8.2 per cent last financial year.

Cashless platforms

The ongoing Covid-19 pandemic has elevated the importance of mobile money platforms with the government calling on Kenyans to use the cashless platforms for transactions to curb transmission. 

According to the report, the amount of money transacted on M-Pesa rose by 18.4 per cent to stand at Sh13.9 trillion while the volume of transactions on the same platform rose by 7.8 per cent to 8.9 billion.

Local transfer of money via M-Pesa rose by 14.6 per cent while withdrawals increased by 5.4 per cent. 

New M-Pesa businesses grew by 43.4 per cent driven mostly by increased savings and lending on the M-Shwari, Fuliza and KCB M-Pesa platforms. 

Another factor driving new M-Pesa growth is international money transfer, via platforms such as Paypal and Alipay, currently with 744,000 customers and 25 global partners in 167 countries.