Kenya's Most Authoritative Political Newspaper

Citizen Weekly

Wednesday, 15 April 2015


The 19 million Kenyans who use M-Pesa for their financial transactions will be left stranded over the weekend. The popular mobile phone money transfer system will be shut down on Saturday and Sunday as Safaricom moves it from servers located in Germany to Kenya.
That means that sending and receiving money, loading up on mobile money from bank accounts, making purchases at petrol stations, supermarkets, bars and restaurants through Lipa na M-Pesa, and paying electricity, water, and other utility bills will be unavailable for the two days.
“We have begun the long-awaited journey to bring M-Pesa home,” said Ms Betty Mwangi, Safaricom’s general manager for financial services.
Borrowers who use the M-Shwari platform — a partnership between Safaricom and the Commercial Bank of Africa — and M-Kesho — the partnership with Equity Bank — will also not be able to borrow or repay loans during the 48-hour period.
Transactions on Kenya Commercial Bank’s Mobi-Bank and M-Benki will also be interrupted because they are hosted by M-Pesa.
Safaricom customers will also not be able to change their personal identification numbers, activate their accounts or access bank accounts for those who use their mobile phones for banking.
The Commercial Bank of Africa is the largest bank by customer numbers largely because of its over 10 million M-Shwari customers.
Each day, M-Shwari processes 50,000 loans and by early March this year, the bank had given out Sh29 billion in loans.
M-Shwari has Sh153 billion in cumulative deposits from its over seven million active users. These, too, will be affected when the system will be temporarily unavailable this weekend.
According to records from Safaricom, M-Pesa users paid Sh11 billion per month through Lipa Na M-Pesa and Pay Bill in the last financial year, meaning that they transacted business worth on average Sh360 million daily.
Every second in the last financial year, which ended in March 2014, M-Pesa users carried out 260 transactions through the mobile money transfer system.
They also carried out 440 airtime top-up transactions through the system. The number of transactions can only have increased in the last 12 months, meaning that on the two days the service will be unavailable, millions of transactions will be on hold.
However, Safaricom yesterday said that once the upgrade is completed, its customers will enjoy faster transaction times while the system will be more secure.
The platform will also offer a wide range of services, including business-to-business transactions, which will benefit banks and utility companies like Kenya Power.
Safaricom said the new system was designed by Vodafone and was built by Huawei.
IBM has functional know-how on its operations. The three will work with Safaricom to ensure the success of the enhanced services.
The telco also said it would use the new system to increase the number of mobile phone-based financial transactions.
At present, nine out of every 10 financial transactions are made in cash, meaning that only a tenth is carried out by phone or card. In the financial year that ended March 2014, M-Pesa earned Safaricom Sh26.56 billion — nearly a fifth of total revenue.
Besides mobile phone users in Kenya, Vodafone customers in Tanzania will also be affected by the interruption of services.
The seven million Vodafone’s M-Pesa customers in the neighbouring country will now be hosted in Kenya.
Mr Michael Joseph, the Vodafone Director of Mobile Money, said in early March that transactions through M-Pesa were possible between the two countries.
Currently, M-Pesa transactions are routed to Germany, where the system’s servers are hosted and are then redirected to Kenya.
This exposes the system to delays and service outages especially due to under-sea fibre optic cable cuts. Such delays will be eradicated once the servers are moved to Nairobi.
According to Mr Kenneth Okwero, Safaricom’s head of products and services development department, the platform for hosting business to customer transactions has already been rolled out.
“We are bringing in business to business transactions where mostly banks and firms like Kenya Power are now involved,” he said.
Statistics from Safaricom show that bulk payments to settle dividends, per diems, salaries and wages through M-Pesa from businesses to individuals grew to an average of Sh8.7 billion per month in the last financial year.
That means retail and bulk payments on the M-Pesa network now account for 19 per cent of total cash moved on the platform.