Safaricom acting CEO Michael Joseph. FILE PHOTO | NMG Safaricom #ticker:SCOM is undecided on when to commercially roll out a new savings service on its M-Pesa platform that the telecoms operator has been testing for weeks.
Acting CEO Michael Joseph said the firm had completed testing the new product, dubbed “Mali” (Kiswahili for wealth), but its fate remains unknown.
Mali, which has capped savings at Sh70, 000 per saver, will offer an annual interest rate of 10 percent, higher than what is offered by commercial banks.
Policymakers say Kenya suffers from a low national savings rate and analysts said that Safaricom could be looking to target the untapped market with the new savings product.
“Mali was and is a trial with only Safaricom staff and a few customers. It has now been completed and we have yet to decide to launch it or not with the requisite approvals,” said Mr Joseph in an interview with the Business Daily without giving more details. At 10 percent, the return from Mali is nearly double the current interest rate that banks are paying on savings. Official data shows that average savings interest fell to 4.58 percent in September compared to 6.33 percent in the same month last year when Parliament made changes to the banking law and removed a clause that compelled banks to pay depositors at least 70 percent of the base lending rate.
“We view the combination of lending and wealth management services as a further boost to earnings from financial services,” Standard Investment Bank said in reference to the Mali product.
“The product possibly includes a partner bank and a fund manager.”
Started 11 years ago as a service to allow Kenyans without access to the banking network to transfer money via mobile phones, M-Pesa now offers loans and savings in conjunction with local banks as well as merchant payment services.
Safaricom launched the overdraft feature called Fuliza on January 7 this year.
Fuliza is underwritten by Kenyan lenders KCB Group #ticker:KCB and NCBA Group #ticker:NIC, which already had partnerships with Safaricom to offer short-term loans on the M-Pesa platform.
Fuliza lent out Sh140 billion in the first nine months, but part of the earnings from the service are shared with its partners.It is not clear if the deposits in the new savings product will be used to back loans, akin to the mode of operations in banks.Mr Joseph said Safaricom is keen to attach more products to M-Pesa […]