Central Bank of Kenya’s decision to extended waiver of merchant fees on mobile money transfer service for transactions below Ksh 1,000 until December 31, 2020 will cause a huge financial loss to Safaricom,
The telecommunications firm Thursday reported that M-pesa revenues could lose up to Ksh.19 billion as a result of the Regulator’s decision.
“The total value of our contribution to the fight against this pandemic (coronavirus) currently stands at Ksh.6.5 billion and continues to grow every day.
We estimate the impact on M-Pesa payment support will increase to about Ksh.19 billion by the end of the year,” outgoing Chairman Nicholas Ng’ang’a told shareholders on Thursday during the telco’s 12 Annual General Meeting.
The CBK introduced the measures March 16th, 2020 to encourage cashless transactions to contain the spread of the coronavirus virus.
In the initial three months, Safaricom had indicated that it estimated a loss of Ksh 5.5 billion.
Last financial year, Safaricom’s revenue from M-Pesa, grew 33.6 percent to 84.4 billion shillings driven by savings and lending and Person to Person (P2P) which make up two-thirds of the total growth.
However, M-Pesa’s revenue contracted by 32.8 percent for the year owing to the reduced betting activity.
“M-Pesa for example could lose approximately Ksh 16.5Billion (19.6 percent of FY20 M-Pesa Revenue) based on the initial estimate of Ksh 5.5Bn forgone for the first three months.
The banking sector which transacts 44 percent of all transactions via mobile channels, could also lose a big chunk of their Non-interest revenue. Although the initial agreement (mobile money relief) was deemed moral suasion, we foresee legal hurdles this time around,” Genghis Capital analysts had commented after the extension.
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The outgoing Safaricom chairman said going forward post-COVID, they look forward to increased collaboration, partnership, and goodwill within the regulatory environment for solutions that will be of ultimate benefit to customers.
“We are aware that the national economy is under great pressure and that is why we have extended our hand of support. Our appeal to the government is that the regulatory environment continues to support the revival of businesses in the long term by enabling innovation and a return to growth,” he said.
“We are aware that the post-COVID-19 period will come with heightened demands for the government to re-establish a strong footing to ensure sustainable economic and social development. We take this opportunity to ask both the National and County Governments to find thoughtful ways to balance revenue maximization with boosting business growth.”