Kenyan Lawmakers Seek to Split Safaricom and M-Pesa
Takeout
- The proposed separation of Safaricom and M-Pesa marks a significant development in Kenya’s telecommunications and financial services landscape.
- The outcome of this legislative battle will have far-reaching implications for the country’s digital economy and the future of mobile money services.
Kenyan lawmakers have revived a controversial bill that could force Safaricom, the country’s leading telecommunications company, to split its mobile money business, M-Pesa. This move comes despite strong opposition from Safaricom, which argues that the integration of its telecom and mobile money operations provides strategic advantages.
The Information and Communications (Amendment) Bill of 2022 aims to separate Safaricom’s telecommunications business from its mobile money unit. While a previous attempt to pass the bill failed due to lack of support, renewed efforts are underway to address concerns about market dominance and regulatory oversight.
M-Pesa’s Dominance and Regulatory Pressure
M-Pesa, Kenya’s most popular mobile money platform, has witnessed significant growth, boasting 31.3 million active users and processing over $312 billion in transactions between March 2023 and March 2024. This dominance has led regulators and lawmakers to push for a separation to increase competition and enhance oversight.
The Central Bank of Kenya (CBK) has been advocating for a complete split of Safaricom and M-Pesa to strengthen its regulatory authority over mobile money transactions. In contrast, Safaricom maintains that a separation would not add value to shareholders and could result in a substantial tax liability.
Safaricom’s Proposed Organizational Structure
Safaricom CEO Peter Ndegwa has outlined plans to establish a Holdco in 2025, reorganizing its various business lines. Under this structure, M-Pesa would become a subsidiary within the same business unit as data, voice, and messaging.
Industry Trends and Global Comparisons
While Safaricom resists a split, its peers, MTN and Airtel Africa, have already separated their mobile money operations. Airtel Money has experienced rapid growth since its spin-off, and MTN’s deal with Mastercard has unlocked significant value.
