Safaricom saw a significant dip in customer deposits in their mobile money wallet, M-Pesa, dropping by Sh10.6 billion to Sh263.3 billion over the six months ending in March 2024. This decline signals a shift, with more withdrawals to cash and other platforms, including banks, during this period.
What is the M-Pesa System?
M-Pesa, launched in 2007, started as a simple person-to-person cash transfer platform and has since evolved into a comprehensive mobile financial service. It now offers savings, credit, payments, international remittances, and investment services. Essentially, M-Pesa allows users to transfer money, pay bills, and access various financial services through their mobile phones. This system has become particularly popular in regions with limited access to traditional banking services, providing a critical financial inclusion tool.
The Numbers
At the end of September last year, M-Pesa held Sh273.9 billion. Despite the recent drop, the platform still handled a whopping Sh40.24 trillion in transactions. It’s clear that M-Pesa is more about transfers and payments rather than savings, explaining why its deposit base is relatively smaller, even though it has more customers than banks.
Safaricom is a big player in the financial services market. With Sh263.3 billion in deposits, it stands tall among giants. For comparison, the top two largest banks by deposits—KCB Bank Kenya and Equity Bank Kenya—had Sh1.12 trillion and Sh609.7 billion, respectively, at the end of December 2023.
Withdrawal Surge
Safaricom’s data shows that withdrawals reached Sh25.61 billion in the financial year ending March 2024, with Sh14.13 billion occurring in the second half of the period. During this time, deposits were Sh5.86 billion, and person-to-person transfers hit Sh6.2 billion.
The second half of the financial year, which includes the December festive season and school fees payments for the first term of 2024, coincided with these high withdrawal rates. However, Safaricom hasn’t directly linked the Sh10.6 billion drop in deposits to these events.
M-Pesa’s Evolution and Financial Performance
Safaricom, listed on the Nairobi Securities Exchange, began disclosing the value of deposits in M-Pesa last September after taking control of M-Pesa Holding Company Limited from Vodafone Group for a symbolic $1 (Sh130).
M-Pesa’s revenue grew by 19.5% to Sh140 billion in the financial year ending March 2024, making up 40.1% of Safaricom’s Sh349.45 billion revenue for the period. The telco ended the year with 44.67 million M-Pesa customers, with 34.64 million being active monthly users.
The Road Ahead
The Central Bank of Kenya is advocating for M-Pesa to be separated from Safaricom’s telecom business to enable more effective regulation of mobile financial services. Despite the challenges, Safaricom’s net profit from its Kenyan operations grew by 13.7% to Sh84.74 billion. However, its Ethiopian venture posted a Sh42.09 billion net loss, with Safaricom’s share being Sh21.7 billion due to its 51.67% stake in the Ethiopian business.
M-Pesa continues to grow and adapt, shaping the financial landscape in Kenya and beyond. As the platform evolves, it remains a vital part of the financial ecosystem, providing essential services to millions.
For more details on M-Pesa’s features and services, check out M-Pesa’s official website.
