On Tuesday, October 8, Kenyan lawmakers are once again pushing for Safaricom, the biggest phone company in Kenya, to split from M-PESA, its popular mobile money service. This effort is part of a new proposal called the 2022 Information and Communications (Amendment) Bill.
If this bill passes, it would create two separate businesses, which lawmakers believe would help make the market fairer and allow for better oversight.
This bill had been introduced before but didn’t get much support, with only two lawmakers voting in favor of it.
If the bill becomes law, it would require Safaricom to turn M-PESA into its own company, something Safaricom has not wanted to do. M-PESA has become very successful, with 31.3 million users and processing a huge $312 billion in transactions from March 2023 to March 2024.
Many lawmakers think that separating the two businesses is essential for fair competition. The bill states, “A person may engage in any other business provided that such person shall legally split or separate the telecommunications business from such other businesses.”
Even with this push, Safaricom insists that keeping everything together is better for its shareholders. In contrast, other companies like MTN and Airtel Africa have already separated their phone and mobile money services. In 2021, Airtel Money became its own business and grew very quickly, while MTN made similar changes that led to a big deal with Mastercard worth $5.2 billion.
Safaricom’s CEO, Peter Ndegwa, is not convinced that splitting M-PESA would help the company. He believes it wouldn’t improve the company’s value or financial situation. Safaricom is also worried about a big tax bill that could come from separating the two services. They estimate this could cost KSh 75 billion ($582 million), which is more than their profit of KSh 52.48 billion ($407.24 million) last year.
The Central Bank of Kenya (CBK) supports the separation to have better control over M-PESA transactions. Right now, the CBK watches over M-PESA, while the Communications Authority of Kenya (CA) manages Safaricom’s phone services. A split would give the CBK more direct control over M-PESA, helping to improve oversight in mobile money.
As the discussion continues, Safaricom has announced plans to create a holding company by 2025 to bring together its different business units, including M-PESA, under one roof. This change could be a way to keep the current structure while also addressing the lawmakers’ concerns.
