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Safaricom’s CEO: A decade on, M-Pesa has room to grow

By Mark Anderson
Posted on Friday, 3 March 2017 15:26

It was a text message sent to a Kenyan farmer that sparked the mobile money revolution. On a bright morning a little over a decade ago, Michael Joseph, the former chief executive officer of Kenyan telecoms firm Safaricom, was summoned to meet with Kenya’s minister of finance to pitch a new service that allowed users to send and receive digital funds through text messages.

“[Joseph] took the minister of finance through the process and demonstrated to him early one morning – because he was an early bird – and he took his phone and paid one of the minister’s farm workers out in the countryside,” Bob Collymore, chief executive officer of Safaricom, tells The Africa Report. “The minister immediately saw the potential [of M-Pesa].”

This month Safaricom is marking the 10th anniversary since the first M-Pesa payment was made. The company estimates that its mobile money platform has generated 860,000 jobs and $1bn of economic activity so far. With about $600m sitting in the system at any one time, transaction charges have proved to be a valuable part of the business, contributing 23% to the company’s turnover last year. “We currently contribute overall about 6.5% of Kenya’s gross domestic product through our activity,” Collymore says.

Global appeal

But although M-Pesa has found enormous success in Kenya and Tanzania, it has struggled to make as big an impact in other countries. “M-Pesa is very popular although it hasn’t really worked in many places,” Collymore says. Governments still regularly come from around the continent to Nairobi to learn about the mobile money platform. Most recently, Togo’s President Faure Gnassingbé visited in December.

Part of Safaricom’s success with M-Pesa is down to the role of government regulators, who allowed the service to take off despite intense lobbying from banks and other groups. “When M-Pesa came there were no regulations around moving money on a mobile phone,” says Collymore. “[Kenyan] regulators allowed innovation to run slightly ahead of the technology, [whereas] most other places have regulated and then innovation has to innovate within those bars – and that’s been a problem.” And Safaricom’s situation was certainly helped by the fact that the Kenyan government owns a 35% stake in the business.

Collymore sees plenty of room to keep expanding M-Pesa. Even in Kenya, which is widely seen as a trailblazer in mobile money, an estimated 93% of payments are made in cash. “There’s a hell of a lot of growth that’s left in [M-Pesa],” he says. One idea to expand the service is to roll out contactless cards that are linked to M-Pesa accounts, making transactions easier and more seamless.

Safaricom has also seen success through its partnerships with Kenya Commercial Bank and the Commercial Bank of Africa to offer loans through M-Pesa. Collymore estimates that up to 160,000 loans are disbursed every day through the service. “Most of these [loan requests] are done very early in the morning – they are done at 3 or 4 o’clock in the morning,” Collymore says. “These are traders who are using it for cash flow. So they are borrowing the money, they are buying their goods and by 7 o’clock they are ready to repay it because they bought it, they’ve transported it, they sold it and they might do two or more transactions per day.”

Looking to the future, Safaricom is targeting fixed-data services as an important new revenue stream. Last year, fixed services made up less than 2% of the company’s total turnover. Going forward, it will be important to meet demand for unlimited data, Collymore says. Kenyans are watching more video-on-demand services such as Netflix than ever before. This has led Safaricom to partner with South African media company Naspers to sell access to its ShowMax platform through M-Pesa.

Another new area that Collymore is targeting is e-commerce. “One of the most important elements of successful e-commerce is of course trust,” says Collymore. “And we are trusted – we have very high trust scores as Safaricom – and so, why wouldn’t you leverage on that if you’ve also got the system, and you’ve also got the payment system?” Collymore sees Nigeria’s Jumia as a good example of African e-commerce success. “We want to be spreading our wings much wider rather than pick on a single thing and say that’s going to be the core,” Collymore says.

Connected farming

Building popularity with low-income Kenyans and with farmers in particular is another part of Safaricom’s growth strategy. Collymore speaks excitedly about the Connected Farmer Alliance, a project spearheaded by UK telecoms firm Vodafone, which owns a 40% stake in Safaricom. “[It] uses the mobile phone to give people farming information to improve the yield of whatever they are farming – their cows, for example,” Collymore says.

Staying with this example, Collymore explains that a dairy farmer could deliver his milk to a processing plant and then be paid for his produce through M-Pesa. The mobile money platform will also tell farmers about the quality of their milk. “If you speak to some of these farmers, they are absolutely astounded with the difference this has made to their yield,” Collymore says. “You can go to a farmer who is probably delivering five or six litres a day – it’s nothing. [Now they are] delivering 20 litres per cow. The difference there is enormous, [from the] same cow.”


Behind this strategy is the desire to forge new relationships with young customers. “[It makes] that farmer more successful; if it makes that farmer more successful, of course he’ll be able to educate his children; if he can educate his children, they’ll want to use our internet, they’ll want to use mobile phones,” Collymore says. “There’s no such thing as a successful business environment in a failing society.”

More businesses need to adopt a development-led approach to their customers, Collymore says. He has become a member of the B Team, a non-profit initiative founded by a group of powerful businesspeople that aims to use their influence to ensure the private sector is “a driving force for social, environmental and economic benefit”. Other members include British billionaire Richard Branson, American publisher Arianna Huffington and Sudanese telecoms tycoon Mo Ibrahim.

More than anything else, it’s ­climate change that worries ­Collymore. Asked about US President Donald Trump’s sceptical position on global warming, ­Collymore frowns. “It’s more than disheartening …And here in Kenya, we feel it,” he says. “It’s palpable. We have a drought. I have been living in this country now for six years – this is our third drought and this drought is pretty bad. You see rising sea levels, you see declining available arable land. So, companies that aren’t addressing that issue, or rather, not just not addressing but positively contributing to planet degradation, I think really need to kind of get a grip on it.”

The Mo Ibrahim Foundation’s (MIF) 10th Anniversary Annual Governance Weekend will be held on April 7-9 in Marrakech. MIF will look at the challenges of leadership in the 21st century and convene African and global experts for a discussion on the upcoming challenges and opportunities for the African continent in the next ten years. The weekend serves as an umbrella gathering for a coalition of partners with shared beliefs and commitment to improving governance and leadership.

• The version of this article that appeared in The Africa Report’s March 2017 edition did not include any references to Bob Collymore’s work with the B Team or the B Team’s involvement in the Mo Ibrahim Governance Weekend. We regret the error.

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