KENYA'S Leading Telco, Safaricom PLC is expanding into the money market fund industry with its new product Ziidi, following approval from the Capital Markets Authority- Kenya (CMA).
This follows ownership disputes over its existing Mali fund, partnering with Standard Investment Bank(SIB), ALA Capital Limited, and Sanlam Investments East Africa instead of original partner Genghis Capital Ltd.
The conflict arose when SIB registered Mali's trademark name while Genghis Capital claimed ownership of the product based on introducing it through the CMA regulatory sandbox.
Despite the controversy, Mali has grown to Sh3 billion in assets under management by September 2024, ranking as the seventeenth largest collective scheme, with Safaricom earning Sh11.6 million in revenues in the six months to September, up from Sh6.2 million a year earlier.
The fund, which allows minimum investments of Sh100 via M-Pesa, has primarily invested in fixed deposits (Sh1.5 billion) and government securities (Sh595.9 million) while awaiting Central Bank of Kenya approval for public launch.
The evolution of M-Pesa into investment products like Mali and Ziidi represents a natural progression in Kenya's financial inclusion journey.
The transformative impact of M-Pesa on Kenya's financial landscape has been remarkable, with financial inclusion reaching 84% of Kenyan adults by 2021, according to the latest FinAccess Household Survey.
This dramatic improvement from just 26.7% in 2006 demonstrates the platform's pivotal role in democratizing financial services. M-Pesa's financial footprint has grown substantially, with customer deposits reaching Sh263.3 billion as of March 2024.
The platform processes massive transaction volumes, with Safaricom's M-Pesa revenue growing 19.5% to reach Sh140 billion in the financial year ended March 2024. The service now maintains 34.64 million active monthly users in Kenya alone.
Kenya's regulatory environment has been crucial in fostering this growth. Unlike other countries such as Brazil and Mongolia, Kenya allowed non-bank operators to issue electronic money and hold matching value assets in pooled accounts within regulated banks.
This regulatory flexibility enabled M-Pesa to thrive and evolve beyond basic money transfers to benefit low-income individuals and rural communities who previously lacked access to banking services.
M-Pesa has established itself as a financial powerhouse, with deposits surpassing many traditional banks. Its Sh273.9 billion in deposits as of September 2023 rivals Stanbic Bank Kenya's Sh272.9 billion.
The platform's 32.1 million active customers dwarf traditional banks' customer bases, with Equity Bank serving 12 million and Co-operative Bank having 5 million clients.
This development comes as Kenya's collective investment schemes cross the Sh250 billion mark for the first time, with total assets under management reaching Sh254.06 billion in June 2024, a 13% increase from March.
The industry is currently led by CIC Unit Trust Scheme with 26.3% market share (Sh66.8 billion in assets), followed by Sanlam Unit Trust at 14.8% (Sh37.6 billion), with investments primarily allocated to government securities (39.2%) and fixed deposits (33.4%).