M-Pesa Grows Despite Betting Shutdowns
Mobile phone-based financing, microfinancing and money transfer service M-Pesa announced positive growth in its report of the first half of 2019’s fiscal year. The company, which is owned by network operator Safaricom, was expected to struggle with a loss of revenue following Kenya’s crackdown on the mobile betting industry. However, Safaricom Interim Chief Executive Officer Michael Josephs said year-on-year (YoY) revenue grew by 18.2%.
Affect of Kenya’s Stricter Laws
Like many African countries right now, Kenya’s gambling industry is in a state of flux. Having exploded in recent years due to the developments in mobile technology, regulators are now scrambling to catch up. Significant revenue needs to be secured through proper taxation, customers need to be protected, underage gambling must be prevented, and support for responsible gambling behavior is essential. In light of all of this, Kenya’s new Gambling Bill was passed in May 2019.
Among other measures, the Bill called for all sportsbooks to undergo a rigorous vetting process. Most, including the two biggest operators Betway Kenya and SportPesa, were found to owe money to the Kenyan Revenue Authority. Until these debts were settled, the firms could not be found in compliance and were required to suspend their betting services.
Not only did this incur significant job losses and the bookmakers had to send their employees home in September and October 2019, it also reduced demand on mobile money traffic. As wagers and winnings were not placed and received via smartphones, there was concern that M-Pesa could sustain considerable losses. Investment bank Genghis Capital predicted that their YoY revenue would only be around 13.3%.
M-Pesa’s “Robust Growth”
Excluding gambling, M-Pesa’s growth is even more impressive, as Josephs reported. He described the profits as “robust”, and said that the YoY revenue grew from 18.2% to 20.9% when gambling activities were excluded.
At the same time, monthly chargeable transactions per customer climbed to 17.5%. The growth was driven by a 12.4% YoY rise in 30-day active M-Pesa customers, and the new average of 13 chargeable transactions per client per month. Josephs added that M-Pesa now accounts for 33.8% of Safaricom’s service revenue, “further accelerating displacement” of conventional messaging and voice services.
Safaricom’s Continued Progress
Though the vigorous expansion of M-Pesa will surely be a relief to Safaricom executives, it is not the only source of growth for the network operator. They posted a 4% growth in their own revenue, with mobile data now accounting for 15% of their service revenue.
Overall, Safaricom earned KSh 129.9 billion with M-Pesa, mobile data and voice services bringing in KSh 41.97 billion, KSh 19.78 billion and KSh 46.87 billion respectively. The company has installed more than 700 LTE sites across Kenya since last year, boosting the country’s 4G coverage to an impressive 63%.
With the “increased penetration and usage, said Josephs, mobile data revenue growth should return to double digits in the second half of 2019. SportPesa and Betway have settled their tax debts and have been allowed to resume their activities in Kenya so monies should soon be streaming in from that source again. The country continues to negotiate the new world of mobile technology and betting, and the prosperity that these developments can bring.