M-PESA to Split from Safaricom- What Happens Next?

Safaricom Ethiopia M-PESA rollout

After years of speculations, political pressure, and internal resistance, it is finally about to happen- Safaricom and its mobile money platform M-PESA will become separate entities by 2023. Recently, its local competitor, Airtel Kenya, became the first to undertake this huge step. Airtel Kenya has already separated its mobile money business, Airtel Money, from its other services. 

Currently, M-PESA services are still under Safaricom PLC, which pays tax as a communication services firm. Since when late Bob Collymore was CEO, the idea of a split has never settled well with Safaricom management. Past and present CEOs have maintained that it feels like a punishment to the company because of its success. 

“The intention is not to separate it as people have speculated. To separate Mpesa, put it into a separate company, and then sell shares in M-PESA. Of course, that would be fantastic, but that’s not the intended purpose, “Michael Joseph, former Safaricom CEO. 

So, what is the purpose?

Not really a split…

While appearing at a TV interview earlier in October 2022, Safaricom’s CEO addressed the separation of these two sides of the company. He confirmed they were not ready to relinquish its mobile money service. It turns out this is a move to get ahead of the pressure and do the split on their terms. 

“We see it as beneficial to customers because they use the same platform. We intend to create a group company or structure in the same way as banks or other consumer companies operate different businesses under the PLC.”Peter Ndegwa, CEO Safaricom PLC.

M-PESA, the Digital Bank

This means there will be a holding company as the listed business and there will be quite a few businesses that operate under Safaricom. The larger group structure will enable Safaricom to engage in both GSM and mobile money services.

By taking this route, M-PESA will still be a Safaricom entity but regulated as a digital bank under the Central Bank of Kenya regulations. This puts it in direct competition with other commercial banks, and an opportunity to expand its financial services. As stated earlier, Airtel Money Kenya is now run and regulated by CBK as a stand-alone business.

According to CBK, the separation of mobile money business from other businesses by telcos will come with immense benefits. It will facilitate the realization of a secure, fast, efficient, and collaborative payment system that supports financial inclusion and innovations that benefit Kenyans.

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