Kenya’s telecommunications giant Safaricom is seeking approval to launch an insurance product in Kenya as it seeks to capitalize on its M-Pesa customers for uptake.
At the same time, the telco is also seeking approval to launch a unit trust and a savings products, hoping to tap into its customer base across the country.
Analysts say Safaricom’s decision to venture into unit trusts will propel them to the next level given that most money markets in Kenya have currently been hit by controversies and struggling to remain afloat due to the Covid-19 pandemic.
Safaricom is seeking approvals from the Capital Markets Authority (CMA), Central Bank of Kenya (CBK), and the Insurance Regulatory Authority (IRA) for the commercial launch of these products into the Kenyan market.
Safaricom CEO Peter Ndegwa says the telco wants to tap into M-Pesa’s 26.7 million active customers that transact about 1.5 trillion shillings a month to grow the savings, unit trust, and insurance products.
“We are exploring the area of wealth management. We have developed a couple of products and we are seeking regulatory approval. Until the approval is given, we may not want to announce the specifics of the products,” said Mr. Ndegwa.
One of Safaricom’s products that have taken over the Kenyan market is Fuliza that has seen millions of Kenyans taking overdrafts from the telco.
In six months to September 2020, Safaricom customers took 149.4 billion shillings from Fuliza, an increase from 112.2 billion shillings a year earlier, indicating a daily borrowing of 830 million shillings per day, showing just how significant it is.
Fuliza is recovered directly from an M-Pesa wallet as soon as the subscriber tops up. This means it is not easy for a subscriber to default on paying Fuliza as long as he/she is using the same line to send and receive cash. Not easy to default.