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Safaricom Secures Insurance Licence, Aims To Offer New Product as M-PESA Revenue Hits Sh77.2 Billion
Safaricom Secures Insurance Licence: Safaricom, Kenya’s biggest telco, has secured an insurance licence from the Insurance Regulatory Authority (IRA), ending a four-year wait.
The company will now offer insurance services to its M-Pesa users with a new product, Bima, its CEO Peter Ndegwa said during Thursday’s H1 2024 earnings call.
Safaricom Secures Insurance Licence
This move is part of Safaricom’s strategy to transform M-PESA into a comprehensive financial service platform that meets its users’ digital needs.
Since 2020, Safaricom has been experimenting with insurance services, anticipating regulatory approval.
With over 30 million active M-PESA users transacting more than $11.6 billion (Sh1.5 trillion) monthly, Safaricom aims to leverage this vast user base to expand its offerings in unit trust, savings, and insurance.
“Innovation remains critical. We have revamped our wealth proposition and have now received an insurance intermediary licence from the Insurance Regulatory Authority,” Ndegwa said.
“This will help us accelerate our rollout of insurance solutions, we expect to rollout propositions in both wealth and savings but also insurance in the second half of this financial year.”
Safaricom has reported notable growth in revenue and earnings, with group service revenue increasing by 13.1% to reach Sh179.9 billion, while Earnings Before Interest and Taxes (EBIT) grew by 1.8% to Sh42.2 billion for the six months ending September 30, 2024.
Safaricom’s strong performance is largely attributed to the success of its Kenyan operations, where service revenue grew by 12.9% to Sh177.5 billion, driving an 18% increase in EBIT to Sh79.2 billion and a 14.1% rise in net income to Sh47.5 billion.
According to TechCabal, the telco’s plans to increase financial services like wealth management and insurance on its M-Pesa platform have run into multiple problems, including a push from the Central Bank of Kenya (CBK) for the company to split its mobile money into a separate unit.
Also Read: Safaricom’s Reverse Call Service is no Longer Totally Free
Safaricom Expansion Across Africa
Safaricom Group’s Kenyan unit continues to be the backbone of its success, while its expansion into Ethiopia has shown impressive growth, despite challenges.
In Ethiopia, Safaricom’s customer base grew 47.3%, reaching 6.1 million monthly active users, with data usage per user standing at 6.6GB, significantly higher than Kenya’s 4.1GB.
Adil Khawaja, Safaricom’s Board Chairman, expressed satisfaction with the results: “The Board is pleased with the great performance recorded in the period under review. We remain focused on our vision of becoming Africa’s leading purpose-led technology company as we advance our propositions in both Ethiopia and Kenya.”
Safaricom Ethiopia has been actively addressing the short-term impact of the foreign exchange reforms and hyperinflation by renegotiating foreign currency contracts, onboarding local suppliers, and reducing expatriate involvement.
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