Kenya’s Safaricom expects a 5.5 billion shilling ($51.64 million) hit to its revenue from M-Pesa in the three months from mid-march after it adjusted prices because of the coronavirus crisis, its chief executive told Reuters.
The foregone revenue, equating to 7.3% of the mobile money platform’s annual earnings, will be caused by the removal of all charges on small peer-to-peer transfers to facilitate cashless payments to help to contain the coronavirus pandemic.
The company, which is part owned by South Africa’s Vodacom and Britain’s Vodafone, is not worried by the projection, said CEO Peter Ndegwa, who took the helm on April 1.
“When Kenya gets back on track, our business should get back on track,” he told Reuters.
“We are in a good place to be able to weather this storm, but our business is linked to how the country comes out on the other side.”
The East African nation has 270 confirmed cases of COVID-19. The government has restricted movement of people and expects the nation’s economic growth to halve to 3% this year.
Under an initial 90-day deal with the government, all charges for cash transfers of less than 1,000 shillings ($9.39) have been removed by all operators.
M-Pesa, which was launched by Safaricom in 2007, is one of the most popular modes of payments in Kenya. The platform is used to send money, save, borrow and make payments for goods and services.
Ndegwa said that the M-Pesa business could benefit from increased usage as customers shun bank notes during the crisis, but cautioned that it was too early to say for certain.
“We are not factoring in any upside until we see how customers cope with this crisis,” he said.
Safaricom has experienced a surge in data traffic as people work from home and students turn to e-learning services.
It has doubled Internet speeds for its fibre customers – about 300,000 homes – and is accelerating installation of new fibre connections to meet growing demand, the CEO said.
Ndegwa, who was Diageo’s managing director for continental Europe before taking his new role, said the coronavirus crisis will present new opportunities in the data business, which Safaricom needs to pick up the slack from declining volumes in traditional mobile telephony.
“People are discovering they can work from home. Education and learning will change. Small businesses are going to learn they can digitise their operations and operate more smartly,” he said.