Kenya’s leading telecoms operator Safaricom said on Thursday it was testing a new mobile savings service, seeking to broaden its successful M-Pesa mobile money platform.
Safaricom is rolling out a new savings service on its M-Pesa platform in the telco’s latest onslaught on the banking sectors.
The company has started testing the new product that will allow M-Pesa users to invest and earn a 10 percent annual interest, which will accrue daily.
The new product, which caps savings at Sh70,000, will be known as Mali (Kiswahili for wealth) and aims to allow subscribers to invest easily without exit restrictions.
Savers will be able to invest money through USSD code *230 # or via a PayBill number. To qualify, one will be required to be a registered M-Pesa user for over three months.
“The product is supposed to encourage savings where you can put in money and withdraw the next day, but you will have earned something on the money since interest is calculated per day,” said a top Safaricom executive, adding that other partners are involved in the firm’s latest savings product. At 10 percent, Safaricom will be offering nearly double the current interest that banks are paying on savings.
Policymakers say the East African nation suffers from a low national savings rate and analysts said Safaricom could be looking to target that untapped market with the new product, dubbed “Mali” (Kiswahili for wealth).
Mali, which will be capped at 70,000 shillings ($690) per saver, will offer an interest rate of 10% per year, higher than that offered by commercial banks, the Business Daily newspaper reported.
Safaricom confirmed it was testing a savings product called Mali, but did not comment on the other details in the newspaper report.
“If it comes on board, it will be a game changer to the ordinary Kenyan. It should do well for their returns,” said Lisa Kimathi, an investment analyst at Standard Investment Bank.
M-Pesa, which allows users to send and receive cash, and pay for goods and services even on basic feature phones, has powered the company’s earnings in recent years.
During the company’s first half to the end of September, M-Pesa revenues grew by 18% to 41.97 billion shillings, with the number of users standing at 23.6 million.
Safaricom, part owned by Vodacom and Britain’s Vodafone, already runs an overdraft facility on M-Pesa called Fuliza and it has savings services in conjunction with two banks – KCB Group and NCBA Group, which offer lower interest rates to depositors.
$1 = 101.5000 Kenyan shillings