M-PESA success fires up Safaricom

March 22, 2012
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NAIROBI, Kenya, Mar 22 – After registering phenomenal success with its money transfer service M-PESA, telecommunications provider Safaricom is now angling to play a major role in promoting financial inclusion in Kenya.

Safaricom Chief Executive Officer Bob Collymore says they are now looking to introduce innovative products in the insurance and banking sectors as they seek to empower communities.

While emphasising that their intention is not to compete with financial institutions, the CEO pointed out that their desire stemmed from the need to use technology to bring change in the lives of Kenyans.

“We are looking at introducing micro-insurance payments for as little as Sh10 because there aren’t many mechanisms that allow you to do that,” he said during an interview with K24.

The firm plans to ride on the back of the recent tariff review on M-PESA that allows customers to make transactions and payments from as low as Sh10 per month.

This move will enable Safaricom in collaboration with partners such as insurance companies and other micro-finance institutions to net more people in lower income groups who would otherwise not have access to their financial services.

These efforts, he pointed out, were being carried out with the blessings of the Central Bank of Kenya that has been at the forefront of championing the (financial) outreach program with the sole objective of bringing more financially excluded Kenyans into the formal system.

A financial access survey conducted in 2009 indicated that the number of people using formal and semi-formal financial services increased from 27 percent in 2006 to 41.9 percent in 2009 while that of people without access to formal banking services declined by about 5.3 percent to 32.7 percent during the same period.

It is projected that the numbers could currently be significantly positive given that a lot of progress has been achieved in the last three years.

In addition, Collymore declared that their vision is also gradually transform Kenya into a ‘cash-less’ economy.

“We want to make M-PESA bigger than cash,” he stressed.

The company is celebrating five years since the introduction of the service which has continued to win dozens of international accolades and helped to put Kenya on the global map as an innovation hub.

Launched in March 2007, M-PESA has over 14.5 million subscribers who transfer an average of Sh56.3 billion per month. Since inception, the service has moved in excess of Sh1.46 trillion reinforcing Safaricom’s tagline ‘Lugha ya pesa ni M-PESA’.

Former Safaricom CEO Michael Joseph explained that M-PESA’s success was unprecedented.

“M-PESA was borne out of our attempts to develop a mobile phone based microfinance solution for women’s groups in rural Kenya,” Joseph said of the innovation.

Initially, their target was to have a subscriber base of 300,000 over several years but as the uptake of the service, which was being fronted as a tool to build customer loyalty continued to increase, its potential to grow into something bigger became clear.

The service has evolved from being just a mobile money transfer service to an alternative mode of payment that offers convenience to customers and businesses alike.

“The partnership has been a win-win for us. M-PESA has eased the customer’s needs in shopping and making any other monetary transactions. It has so far positioned Uchumi as a one-stop-shop because customers do not need to queue in banks and at ATM (Automated Teller Machines) points and neither do they have to combat with insecurity by carrying large amounts of cash,” retail chain Uchumi Supermarkets boss Jonathan Ciano summed up the benefits.

Uchumi is the biggest M-PESA agent out of a total of 37,000 and was among the first to embrace the concept and has continued to reap big from the relationship with unconfirmed reports indicating that the chain earns about Sh3 million per months in commissions.

The telecommunications firm believes that the sky is the limit and it looks forward to M-PESA achieving even greater success and contributing more to the economy in Kenya and beyond.

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