The largest telecommunications company in Kenya, Safaricom, has finally obtained an insurance license from the Insurance Regulatory Authority (IRA) after a four-year wait. The company is set to introduce insurance services to its M-Pesa users through a new product called Bima, as announced by CEO Peter Ndegwa during the H1 2024 earnings call.
This new product is in line with Safaricom’s strategy to expand M-Pesa into a comprehensive financial service provider that caters to the digital needs of its customers. Safaricom has been testing insurance products since 2020 while awaiting regulatory approval.
CEO Ndegwa emphasized the importance of innovation and the company’s focus on enhancing its wealth proposition. With the newly acquired insurance intermediary license, Safaricom aims to expedite the rollout of insurance solutions, including offerings in wealth management, savings, and insurance in the latter half of the current financial year.
Safaricom aims to leverage its vast user base, with over 30 million active users transacting approximately $11.6 billion (KES1.5 trillion) monthly, to promote its unit trust, savings, and insurance products and counterbalance the decline in traditional revenue streams like calls and text messages. With only a 3% insurance penetration rate in Kenya, Safaricom is optimistic about tapping into the insurance market through the popularity of M-Pesa.
Despite facing challenges, such as pressure from the Central Bank of Kenya to separate its mobile money service into a distinct unit, Safaricom has been expanding its financial services on the M-Pesa platform. The company already offers a unit trust product called Mali, savings accounts in partnership with KCB Group and NCBA, and an overdraft product.
In the first half of 2024, M-Pesa contributed 43% of the service revenue, showing a significant growth of 16.6% to reach $560 million (KES77.2 billion) compared to the same period in the previous year.
Safaricom currently dominates Kenya’s mobile money market with a 93.4% share, leaving Airtel Money with a 6.6% share, according to the Communications Authority of Kenya.