What Will Make Telecommunications Company Safaricom Tick In 2023?

Safaricom is a giant. Let us face it. It is one telecommunications company whose roots are so deep within and without Kenya that we cannot afford to lose or see it going down even with an iota. It is too important to let go.

As the year kicks off, many investors are looking for companies they can invest in, and of course, Safaricom pops up among their top options. Safaricom, being a name that everyone knows and associates with comes with an unwritten trust that only those with a third eye can see.

Soko Directory analyzed and came up with five reasons that will make Safaricom tick this year and a reason enough for those looking to invest to channel their funds. This piece does not inform investor choices but gives reasons as to why we the giant come out as a good option.

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According to our analysis, here is what will make Safaricom tick in 2023:

Taxes and Revenue

Safaricom, in the financial year ending March 2022, remitted 124.7 billion shillings in duties, taxes, and license fees to the government. This payment increased the total duties, taxes, and fees paid by Safaricom since its inception to 1.04 trillion shillings. This excludes the dividends that government receives for its 35 percent stake in the telco.

Coming at a time the government of Kenya is pushing every avenue that can net in more taxes and revenues, Safaricom remains the largest taxpayer and revenue earner for the government of Kenya, hence contributing to the trickling-down benefit effect down the value chain.

And with the government seeking to link the Kenya Revenue Authority (KRA) to the M-Pesa systems, the contribution of Safaricom as a whole, plus the more than 30 million M-Pesa users will be momentous and something the government will have to guard with envy.

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M-Pesa

The value of mobile transactions in the 11 months to November last year hit 7.2 trillion shillings, representing a 15 percent growth compared to the 6.24 trillion shillings recorded in a similar period in 2021 with over 90 percent of it being via M-Pesa.

Between March 2020 and October 2022, active mobile money users have risen by 6.2 million while the monthly volume and value of Person-to-Person transactions increased from 162 million transactions worth 234 billion shillings to 440 million transactions worth 399 billion shillings. This represents an increase of 171 percent and 71 percent respectively.

M-Pesa virtually cuts across the economy and almost all other sectors depend on it. M-Pesa has been quoted as the reason Kenya has been leading in financial inclusion for more than 10 years. The company continues coming up with different interesting features.

Currently, all Kenyan commercial banks have integrated M-Pesa into their systems for customers to deposit funds to their bank accounts and withdraw from their bank accounts to their M-Pesa wallets without visiting branches.

Soko Directory, however, sees the idea of separating M-Pesa from Safaricom so that both can be standalone businesses as not a very good idea.

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Fuliza

Fuliza has received both praise and condemnation in equal measure. However, this is one of the products by Safaricom that clicked and hit the table from the moment it was launched and Kenyans have never had enough.

Fuliza is an overdraft by Safaricom’s M-Pesa that gives customers an opportunity to continue with their transactions even when their M-Pesa balance is zero. Initially, it was meant for payment of products and services only.

But now, Fuliza customers can withdraw their Fuliza at an M-Pesa agent just the same way they do for normal M-Pesa transactions. Fuliza, despite other competitors like “Hustler Fund”, will continue making Safaricom tick and big.

Kenyans borrowed an average of 1.6 billion shillings from Fuliza, Safaricom’s M-Pesa overdraft during the first 6 months of 2022.

In 6 months to June 2022, Fuliza disbursed 290 billion shillings up from 220.38 billion shillings disbursed in the same period last year. This means Kenyans were borrowing about 66,666,666 shillings per