In response to covid-19, the Central Bank of Kenya extended the suspension of fees on mobile money transactions by 6 months. This represents a forecast loss of $ 152.1 million for Safaricom. The leader in this business segment says it can handle this difficult time.
The Central Bank of Kenya has decided to extend it by another 6 months, its directive requiring that users should not be billed for mobile money transactions. The monetary issuing institution explains its decision by the context of the health crisis, which requires reducing direct and indirect contact between people as much as possible.
This decision will weigh on revenues from Safaricom’s mobile money transaction platform, M-Pesa, which dominates the sector with almost 99% of operations in the field. The company said that implementing the measure, which began in March, costs it 1.8 billion shillings a month, or $ 16.9 million. Over the 9-month period that this situation will last, we can anticipate an overall loss of 16.2 billion shillings ($ 152.1 million). It is also close to 20% of M-Pesa’s revenues for the year 2019 which will be thus lost.
Safaricom managers are understanding. “When Kenya gets back on track, our business should follow the same trend. We are well placed to weather this storm, but on the other hand, our business is linked to how the country will fare, “ said Peter Ndegwa, its managing director who took office on 1 st April 2020.
Things are more difficult for commercial banks, which find it difficult to let any source of revenue through. During this period, interest income was under pressure, and operating margins reduced due to the credit restructuring they had to carry out (approximately $ 3.4 billion). Some banks have agreed to waive fees for withdrawing cash via mobile. Others, on the other hand, say they expect agreements from their board of directors.