African markets

Kenya: Safaricom takes 99.9% of the mobile money market

Safaricom has raised its control of the mobile money market to 99.9% as part of regulators’ efforts to open up its M-Pesa platform to interface with those of rivals Airtel Kenya and Telkom Kenya in a bid to enhance competition in the sector.

Data from the Central Bank of Kenya (CBK) shows that M-Pesa has grown its share of mobile money transaction value over the past three years to reach Kshs 2.206 trillion (99.9%) over a total of 2,208 billion shillings. value of transactions in 2021.

The growth of M-Pesa ate the market for Airtel Money and Telkom’s T-Kash during the period, with their shares falling to 0.2% and 0.1% respectively.

Safaricom’s control of the market has prompted pressure for regulatory changes initiated by rivals who allege the telco is abusing its dominant position.

The CBK, in a presentation to Parliament, said competition in the industry is being addressed through increased integration of competing platforms.

“Key initiatives to impact the payments industry include large-scale interoperability to build on existing collaboration and progress toward national ‘pay anyone anywhere’ change,” CBK says in the presentation.

The regulator published draft regulations in 2020 to allow users to withdraw money from an agent of their choice, whether it is Safaricom, Airtel or Telkom.

Airtel and Telkom subscribers will also be allowed to pay their bills through Safaricom’s Lipa na M-Pesa if the proposed regulations get a parliamentary green light, marking the latest push to deepen financial inclusion in the country.

Safaricom has been uncomfortable with the push to open up M-Pesa outlets to rival companies.

Over the years, mobile money has become a lucrative source of revenue for telecom operators as customers use it to send money, pay for goods and services, and take out short-term credit.

CBK data shows Safaricom increased its control of the mobile money market from 99.7% in 2019 to 99.8% a year later.

Airtel Money saw its share decline from 0.3% in 2019 to 0.2% a year later, while T-Kash fell from 0.004% to 0.006% over a similar period.

Since 2018, subscribers of the three telecom operators send money over mobile networks but can only withdraw money from agents associated with the operator.

Airtel and Telkom have repeatedly petitioned parliament for the government to declare Safaricom the dominant player in the industry, paving the way for regulatory changes meant to boost their declining fortunes.