Safaricom to Launch new savings service
Denis Gitau  |  May 4, 2020

Safaricom is looking to grow its share of the financial services market by introducing a unit trust investment product through its Mpesa platform. The new mobile savings service is currently in its pilot testing. The savings scheme will enable subscribers to make small payments through Mpesa which will get pooled together and placed in a collective investment scheme that will invest in assets like fixed bank deposits, stocks, and government securities.

The new service, named Mali, is going to be introduced by the telco once it gets approved by regulatory bodies.

The savings service will offer 10 percent on deposits that are capped at Kshs. 70,000 per saver for the pilot test. The 10 percent interest being offered by Mali is close to double the interest offered by banks on savings.

The testing began in December. The introduction of Mali in the market comes at a time when Safaricom is looking to expand the scope of Mpesa from sending and receiving money, accessing loans, and making payments to include insurance and wealth management.

Subscribers will enjoy returns from either capital growth of their units or dividends.

“We are in the final stages of piloting a unit trust investment product enabling customers to create and retain wealth,” said Michael Joseph, a director at Safaricom who served as acting CEO till April.

While Safaricom did not disclose details of the savings product, it is expected to partner with a fund manager that already has the Capital Markets Authority’s licensing. The giant telco is expected to earn fees from the wealth management service as the product will generate new income for Mpesa as the new product is to aid in the enhancement of Mpesa as a lifestyle platform.

In the coming years, Safaricom predicts that Mpesa will make up half of its total revenue as the income generated by voice and SMS flatten.

Standard Investment Bank views Mali’s wealth management and lending service combination as a boost to earnings generated by financial services as it possibly includes a fund manager and partner bank.

Kenyan Policymakers say that Kenya suffers from a low rate of national savings and Safaricom could be using the new savings product to target this untapped market.