Archive for February, 2014

Forget M-Shwari, the safest way to double your money is to fold it over once and put it in your pocket.

“He that by usury and unjust gain increaseth his substance, he shall gather it for him that will pity the poor.”


I once had someone run an errand for me at a cost of Shs 100 but couldn’t find them later that day to pay the wages. I thus thought it would be easy and convenient if I would simply pay via Mpesa; well it was, but it cost me dearly: I had to send the said person Shs 127 because I had to cover their withdrawal costs; to transfer this amount cost me Shs 27; in total I had spent Shs 54 to pay Shs 100….

A few stats about Safaricom’s profits and financial services (from Fortune no less)

1. In 2013 Safaricom (40% of which is owned by UK’s Vodafone Group) reported a record $22 billion in wireless financial transactions (equivalent to 60% of Kenya’s GDP)
2. Largely on the strength of M-Pesa’s success, Safaricom reported six-month net income of $130 million in its latest quarter. That’s the best half-year result in Kenya’s corporate history and makes Safaricom, which controls about 80% of Kenya’s wireless market, the most profitable corporation in East Africa.
3. Safaricom’s M-Pesa platform has more than 15 million active subscribers
4. Safaricom dubuted a core banking service, M-Shwari, a little over a year ago in partnership with Commercial Bank of Africa. This offering has attracted more than 2 million subscribers.
5. M-Shwari has however been criticised for making too much money from Kenya’s poorest. Loans of up to $300 have a term of 30 days and carry a 7.5% rate of interest, which on an annualized basis works out to nearly 100%. Additionally, a higher rate of interest is applied if a customer pays off his loan early or late, and while a loan is outstanding, the balance in a customer’s M-Shwari savings account is frozen up to the amount due. This creates a scenario where low-income Kenyans could in effect be borrowing from themselves.

Notably the article also states: “The Kenyan authorities have long recognized the potentially detrimental consequences of Safaricom’s quasi-monopoly status,” says Michael Fuchs, a Chevy Chase, Md.-based finance and development specialist who spent years in Africa working for the World Bank, “but have been reluctant to disturb, or possibly derail, the m-money revolution.”

Looks like Safaricom is where they will lend you money if you can prove that you don’t need it.


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