(Nairobi) – Kenya’s largest telecommunications company, Safaricom, has secured an insurance licence from the Insurance Regulatory Authority (IRA), ending a four year wait. This approval allows Safaricom to launch its new insurance product, Bima, which will be available to its M-Pesa users. The announcement was made by Safaricom CEO Peter Ndegwa during the company’s H1 2024 earnings call.
The new product is part of Safaricom’s strategy to broaden the scope of M-Pesa beyond mobile money to become a full-service financial platform catering to the “digital needs” of its customers. Since 2020, Safaricom has been testing insurance offerings, and the long-awaited approval has paved the way for the company to accelerate the rollout of its insurance and wealth management solutions.
Ndegwa emphasized that innovation is crucial to the company’s success, and the company has now received an insurance intermediary license. “This will help us accelerate our rollout of insurance solutions. We expect to introduce both wealth and savings products, as well as insurance, in the second half of this financial year,” he added.
The telco’s decision to enter the insurance market comes as part of a broader effort to expand M-Pesa’s offerings and offset declining revenue from traditional services like calls and texts. M-Pesa already serves over 30 million active users, transacting more than $11.6 billion (KES 1.5 trillion) monthly. With only 3% of Kenyans currently covered by insurance, Safaricom aims to leverage M-Pesa’s massive user base to capture a share of the underdeveloped insurance market.
Despite the approval, Safaricom has faced regulatory hurdles in expanding its financial services, including pressure from the Central Bank of Kenya (CBK) to separate M-Pesa’s mobile money business into an independent unit. Nevertheless, the company remains focused on growing its financial services portfolio.
M-Pesa already offers a range of financial products, including a unit trust product called Mali, savings accounts through partnerships with KCB Group and NCBA, and overdraft services. The introduction of insurance products is expected to bolster M-Pesa’s financial services offering and further solidify its position in Kenya’s mobile money market.
For the first half of 2024, M-Pesa generated 43% of Safaricom’s total service revenue, amounting to $560 million (KES 77.2 billion), a 16.6% growth compared to the same period last year. With a dominant 93.4% market share in Kenya’s mobile money space, Safaricom faces minimal competition from Airtel Money, which holds just 6.6% of the market share, according to data from the Communications Authority of Kenya.
Table: M-Pesa Financial Products
| Product | Description |
|---|---|
| Bima | New insurance product offered through M-Pesa |
| Mali | Unit trust product available through M-Pesa |
| Savings Accounts | Accounts in partnership with KCB Group and NCBA |
| Overdraft Product | Short-term overdraft service available to M-Pesa users |
| Insurance | A range of insurance solutions expected to roll out in the second half of the financial year |
Safaricom’s push to enhance its financial services with the launch of insurance products demonstrates the company’s commitment to providing a comprehensive financial platform for its millions of users in Kenya. The launch of Bima marks a key step towards offering more than just mobile money services, reinforcing M-Pesa as a leading tool for financial inclusion in the region.