After years of speculation, political pressure and internal backlash, it’s finally happening – Safaricom and its mobile money platform M-PESA will become separate entities.
Recently, its local competitor Airtel Kenya was the first to do so. a huge step. Airtel Kenya has already separated its Airtel Money mobile money business from its other services.
Currently, M-PESA services are still under Safaricom PLC, which pays tax as a communications services company.
Since Bob Collymore was CEO, the idea of a split never sat well with Safaricom’s management. Past and present CEOs have said the company feels this is punishment for its success.
“The intention is not to separate as people have speculated. To spin off Mpesa, put it into a separate company and then sell the M-PESA shares.
That would of course be fantastic, but that is not the intended purpose,” Michael Joseph, former CEO of Safaricom.
M-PESA, the digital bank
This means that as a traded company it will be a holding company 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.
This way, M-PESA will still be a Safaricom entity, but will be regulated as a digital bank under 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 managed and regulated by CBK as a separate business.
According to CBK, separating the mobile money business from other businesses by telcos will have huge benefits. It will facilitate the implementation of a secure, fast, efficient and collaborative payment system that promotes financial inclusion and innovation that benefits Kenyans.
