Safaricom, Kenya’s largest telecommunications company, has received an insurance license from the Insurance Regulatory Authority (IRA) after a four-year wait. This new license enables Safaricom to offer insurance products through its popular mobile money platform, M-Pesa. The new insurance service, called “Bima,” was introduced by CEO Peter Ndegwa during Safaricom’s H1 2024 earnings call. This addition aligns with Safaricom’s goal of expanding M-Pesa from a basic mobile money platform into a more comprehensive financial service provider that meets its customers’ digital and financial needs.
Safaricom had previously been exploring insurance options and piloted insurance products as early as 2020 while awaiting regulatory clearance. Now, with the insurance intermediary license, Safaricom plans to accelerate the introduction of insurance, wealth, and savings products during the second half of the fiscal year. This move aims to tap into M-Pesa’s massive user base of over 30 million active users, which handles monthly transactions exceeding $11.6 billion (KES1.5 trillion).
Kenya’s insurance penetration is currently at a low 3%, and Safaricom is looking to capitalize on M-Pesa’s wide reach to expand its presence in the insurance market. This shift towards diversified financial services helps the company offset declines in its traditional revenue sources, such as calls and SMS.
Despite its growth, M-Pesa faces challenges, including regulatory pressure from the Central Bank of Kenya (CBK), which has suggested that Safaricom separate its mobile money and telco businesses. In addition to “Bima,” M-Pesa already offers products like “Mali,” a unit trust, and savings accounts through partnerships with KCB Group and NCBA Bank. As of H1 2024, M-Pesa contributed 43% of Safaricom’s service revenue, generating $560 million (KES77.2 billion) with a 16.6% year-on-year growth.