After a four-year wait, Safaricom, has finally received an insurance license from the Insurance Regulatory Authority (IRA).
This milestone allows the company to offer insurance services through M-PESA, its popular mobile money platform.
CEO Peter Ndegwa announced the news during the company’s H1 2024 earnings presentation.
This move is part of Safaricom’s strategy to transform M-PESA into a comprehensive financial service platform that meets its users’ digital needs.
Since 2020, Safaricom has been experimenting with insurance services, anticipating regulatory approval.
With over 30 million active M-PESA users transacting more than $11.6 billion (Sh1.5 trillion) monthly, Safaricom aims to leverage this vast user base to expand its offerings in unit trust, savings, and insurance.
Half year results
Safaricom has reported notable growth in revenue and earnings, with group service revenue increasing by 13.1% to reach Sh179.9 billion, while Earnings Before Interest and Taxes (EBIT) grew by 1.8% to Sh42.2 billion for the six months ending September 30, 2024.
Safaricom’s strong performance is largely attributed to the success of its Kenyan operations, where service revenue grew by 12.9% to Sh177.5 billion, driving an 18% increase in EBIT to Sh79.2 billion and a 14.1% rise in net income to Sh47.5 billion.
Safaricom’s CEO Peter Ndegwa said that the performance reflects the relentless execution of the company's strategy and the value given to customers through technology.
Kenya and Ethiopia Drive Revenue Growth
Safaricom Group’s Kenyan unit continues to be the backbone of its success, while its expansion into Ethiopia has shown impressive growth, despite challenges.
In Ethiopia, Safaricom’s customer base grew 47.3%, reaching 6.1 million monthly active users, with data usage per user standing at 6.6GB, significantly higher than Kenya’s 4.1GB.
Adil Khawaja, Safaricom’s Board Chairman, expressed satisfaction with the results: “The Board is pleased with the great performance recorded in the period under review. We remain focused on our vision of becoming Africa’s leading purpose-led technology company as we advance our propositions in both Ethiopia and Kenya.”
Safaricom Ethiopia has been actively addressing the short-term impact of the foreign exchange reforms and hyperinflation by renegotiating foreign currency contracts, onboarding local suppliers, and reducing expatriate involvement.
Segment Performance
Key contributors to Safaricom’s robust results include:
- Voice Revenue: Sh40.9 billion, a 4.5% increase year-over-year.
- M-PESA Revenue: Sh77.2 billion, up by 16.6% year-over-year.
- Mobile Data Revenue: Sh37.6 billion, with a growth rate of 21.5% year-over-year.
The telecom giant’s mobile connectivity business, which includes voice, data, and SMS, made up 52.2% of the total revenue at Sh93.9 billion, while M-PESA accounted for 42.9% at Sh77.2 billion.
Safaricom’s Expanding Customer Base
With a total customer base reaching 52 million, Safaricom saw a 7.8% increase year-over-year.
Active M-PESA customers reached 40.9 million, with mobile data users climbing to 39.8 million.
Key Financial Highlights
- Net Income (Underlying Basis): Sh36.7 billion, a 21.7% rise year-over-year.
- Safaricom PLC Kenya Net Income: Sh47.5 billion, growing by 14.1% year-over-year.