Safaricom and its parent company Vodacom are entering into negotiations with British firm Vodafone to purchase exclusive rights to M-Pesa for an estimated $13 million.
In a statement to Reuters, Safaricom CEO Bob Collymore said this purchase would help the companies save the vast sums currently paid to Vodafone as royalties, and help expand the mobile money service to new African markets.
The royalty currently stands at 2% of all revenues accrued from M-Pesa. In the 2018 Financial year M-Pesa revenues sat at $741 million.
South Africa based Vodacom which owns 35% of Safaricom and has its own operations in Tanzania, also pays a 5% royalty to Vodafone for the use of M-Pesa in the region.
“More important than the significant savings is about us determining the future, the roadmap of M-Pesa because at the moment the roadmap is determined by Vodafone,” Mr Collymore continues, “Given that the bulk of the MPESA business is in Africa, between Tanzania and Kenya, it is right for us to be determinants.”
As reported by Innovation Village yesterday (Thursday), Mr Collymore announced the extension of his tenure as Safaricom CEO by a year.
He has since asserted his intentions for the remaining year towards improving the performance of the company’s e-commerce sector, which has notoriously under-performed since it launched, as well as improve the agribusiness unit. “In the next 12 months that I will be the CEO, we want to get e-commerce working better and scale up agri-business, which is one of the country’s major sectors in generating revenue,” he said.
Safaricom’s residual profit grew 14.7%, up to $640m, a jump which can be attributed to the consistently incredible performance of M-Pesa and mobile data. The company has seen profits jump in this fashion for the seventh straight year.
In Africa, M-Pesa is available in Tanzania, Lesotho, DRC, Ghana, Mozambique and Egypt, with Tanzania and Kenya being the biggest users. Worldwide, it is available in India, Afghanistan, and Romania.
Collymore, 61, took the reigns of Safaricom from former CEO Michael Joseph in 2010.
