After a four year wait, Kenya’s telecommunications giant, Safaricom, has finally secured an insurance licence from the Insurance Regulatory Authority (IRA), opening doors for new insurance offerings through its M-Pesa platform. During Safaricom’s H1 2024 earnings announcement, CEO Peter Ndegwa confirmed the launch of an insurance product named Bima, marking a pivotal move towards establishing M-Pesa as a fully operational financial service.
The insurance licence is in agreement with Safaricom’s goals to extend beyond telecommunications and intensify its role in digital financial services, particularly in unit trusts, savings, and now, insurance. Since 2020, Safaricom has been trialling insurance services in preparation for this regulatory approval.
“Innovation remains critical. We have revamped our wealth proposition and have now received an insurance intermediary licence from the Insurance Regulatory Authority,” Ndegwa stated. “This will help us accelerate our rollout of insurance solutions, with propositions in both wealth and savings, alongside insurance, expected in the second half of the financial year.”
With over 30 million active M-Pesa users, transacting an impressive $11.6 billion monthly, Safaricom wants to leverage its vast customer base to drive adoption of these new financial services. The company hopes to capitalize on Kenya’s low insurance penetration rate of just 3% by utilizing M-Pesa’s dominance in the mobile money market.
The development also follows robust financial growth for M-Pesa, which contributed 43% of Safaricom’s service revenue, rising 16.6% to reach $560 million in H1 2024. M-Pesa currently commands a staggering 93.4% share of Kenya’s mobile money market, with Airtel Money trailing at 6.6%.
Despite these strides, Safaricom’s expansion has not been without challenges. The Central Bank of Kenya has urged the telco to separate its mobile money operations from the rest of its business, a move aimed at tighter regulation, while the company recently had to deny sharing customer information to the Kenyan government.
Beyond Kenya, Safaricom’s Ethiopian expansion has shown positive momentum. The company’s subscriber base in Ethiopia grew by 47.3% to reach 6.1 million monthly active users, with data usage per customer exceeding that in Kenya. This growth comes in the midst of efforts to combat the impact of foreign exchange reforms and inflation through strategic partnerships with local suppliers and a reduction in over reliance on expatriates.
