Kenya’s telecommunications giant Safaricom has announced its plan to expand its mobile money transfer services, M-Pesa, to other African countries after a successful transfer of its 35 percent stake to Vodacom, a South African subsidiary of UK’s telecommunications company Vodafone Group.
Announcing the plan last week, Safaricom’s CEO Bob Collymore said Vodafone Group will exchange a 35 percent indirect interest in Safaricom for new ordinary Vodacom shares, while continuing to hold 5 percent of its indirect interest in the company.
He also revealed that Vodafone Group has given appropriate assurances to the government of Kenya to ensure its longstanding partnership with Safaricom continues to grow.
More about this
“The agreement Vodafone Group has reached with the Government of Kenya will ensure Safaricom continues to have strong Kenyan representation at Board and management levels, and promote the continued successful expansion of the company as well as the opportunity to drive M-PESA to other markets in the continent,” Mr. Collymore said in a statement.
However, the transaction is subject to approval from Vodacom’s minority shareholders, the Financial Surveillance Department of the South African Reserve Bank and confirmation from the Kenya Capital Markets Authority to ensure Vodacom is not obliged to make a mandatory bid for Safaricom, the statement said.
Mobile-Based Money Transfer
In 2007, Safaricom launched a mobile phone-based money transfer service called M-Pesa (M for mobile, pesa for money) in Kenya, which has since revolutionized the way people send and receive money across the country.
The service, which has since expanded to neighboring countries like Tanzania and Uganda, has become an integral part of everyday life for most Kenyans as it allows them to deposit and withdraw money instantly using their mobile phones.
It has also created millions of jobs across the East African region by creating a network of M-Pesa agents who act as banking agents.
During the release of last year’s financial report earlier this month, Mr. Collymore revealed that M-Pesa revenue grew by 27.2 percent to 41.5 billion Kenyan shillings, a growth he attributed to the rising number of M-Pesa customers and agents across the region.
“M-PESA continues to be our key platform to drive financial inclusion. We will continue to drive the growth of savings and loans, grow cashless payments for businesses through M-PESA and launch new innovative products,” said Collymore.
The service has been widely applauded for giving millions of low-income people across the East African region access to the formal financial system and for reducing crime in a largely cash-based society.