The leading Kenyan mobile operator – and mobile money pioneer – Safaricom has had a tough year during the pandemic, suffering its first profit decline in a decade. Could a deal with online retail giant Amazon provide a welcome revenue boost?
Safaricom complied with central bank requests to remove all charges on small peer-to-peer transfers in March 2020 for the remainder of the year. Coronavirus-related price cuts helped to encouraged cashless payments and limit unnecessary contact during the Covid-19 pandemic. However, the earnings of both Safaricom and many Kenyan banks took a big hit while the charges were removed.
Now, according to Bloomberg, Safaricom is holding talks with Amazon about the use of its mobile money service M-Pesa on Amazon’s platform. This could help Safaricom to expand its reach and bounce back from a difficult year.
With about a third of Safaricom’s revenue coming from M-Pesa, it seems Safaricom thinks a lot more could be done with the service. Indeed, Safaricom already has partnerships with a unit of China’s Alibaba Group Holdings Ltd and Paypal Holdings Inc.
It’s true that M-Pesa began life as a fairly low-tech service operating on basic phones. However, in Kenya, as in many other African countries, affordable smartphones are changing the payment landscape and, with whole generations of Kenyans now used to paying and saving by smartphone, there’s a vast potential market to target.
There’s also an existing relationship. Bloomberg points out that Safaricom and Amazon already work together on web services and Safaricom runs local cloud sales for the US company.