Government to Announce the Split of M-Pesa from Safaricom

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Mobile Teleco giant Safaricom will be a separate entity from its revolutionary money transfer services, M-PESA. The framework for the process has been laid with reports indicating Chairman John Ngumi’s last week’s resignation is tied to the move. Mr. Ngumi was nominated to the Safaricom Board by the National Treasury in its capacity as a 35 percent shareholder on August 1, 2022.

In October 2022, a month after President Ruto took over, the Central Bank of Kenya (CBK) through its Governor Patrick Njoroge backed the plan to have M-PESA as a separate entity from Safaricom noting a roadmap for the split was likely to be in place by end of the year, or latest January.

The NCBA associated with the Kenyatta family is set to bear the greatest loss if M-PESA is taken away from Safaricom.

NCBA and KCB Group are the only two big banks that underwrite Fuliza overdrafts. The two institutions have been working hand in hand with Safaricom PLC for the past years and in offering Fuliza and M-Shwari services.

“To secure the operations on the money side… we are now much further ahead in this thing, hopefully before the end of the year but definitely by January,” Governor Njoroge said.

NCBA Bank Kenya, whose full name is NCBA Bank Kenya Plc, is a commercial bank in Kenya. It is licensed by the Central Bank of Kenya, the country’s central bank and national banking regulator.

Fuliza accounted for 82.5 percent of the Sh585 billion digital loans at NCBA in the financial year ending December 2021.

A further Sh96 billion, or 60.8 percent of Sh158 billion that KCB disbursed via mobile phones, was through Fuliza—a 32 per cent increase from Sh73 billion a year earlier.

The new Kenya Kwanza administration during the campaigns vowed to split Safaricom into several stand-alone business units. 

“Effective immediately after forming the government, the administration will seek the break-up of Safaricom Ltd into two distinct and separate business entities with a mobile telecommunications institution under the direct jurisdiction of the Communications Authority and the financial institution firmly under the jurisdiction of the Central Bank of Kenya” reads part of the Kenya Kwanza coalition’s manifesto. 

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