British telecommunications firm Vodafone has launched transfer services between Tanzania and Kenya on M-Pesa in a bid to increase access to mobile money in the region. Vodafone is the largest shareholder in Safaricom, the Kenyan company that launched the mobile money service in 2007.
“With a substantial unbanked population transacting mainly in cash, the Tanzania-Kenya corridor represents a significant opportunity for M-Pesa to give people and companies an accessible, low-cost alternative to traditional international remittances,” said Michael Joseph, the Vodafone Director of Mobile Money.
The new service comes just two months after the Central Bank of Kenya (CBK) awarded Safaricom a cash remittance operating licence, enabling the telecoms giant to transfer money out of the country. Safaricom’s general manager financial services, Betty Mwangi-Thuo, told Business Daily last year that “the biggest benefit to us (Safaricom) is that we will now be able to transfer money out through partners, which was not possible before.”
However, the new licence will allow Safaricom to compete with commercial banks and forex bureaus as it provides a cheaper alternative. International money transfer through traditional channels may be up to 31 percent of the transaction, according to Vodafone.
“By comparison, using M-Pesa to transfer Sh4,550 across the Tanzania-Kenya border would cost around 1 percent of the transaction plus a foreign exchange fee,” the British telco said in a statement.
In 2012, formal remittance between Tanzania and Kenya stood at $133 million, according to the World Bank. Vodafone which is being paid royalties of between 10 percent and 25 percent from M-Pesa’s annual revenues since February 2007, seeks a share of the cross-border remittance.
“This is a new chapter in the continuing growth story of Mpesa,” said Safaricom’s chief executive Bob Collymore.
According to him, the new Kenya-Tanzania transfer service will “unleash the transformative power of a first of its kind cross-border payment system.”
M-Pesa’s growth since its launch in Kenya has been impressive. As at December 2014, the mobile money service had approximately 19.5 million active customers and approximately 250,000 agents worldwide. The service is now available in nine markets, including India and Romania.