Bill gates recently released a video talking about mobile banking where he named Kenya and Tanzania as the most advanced in this sector. Praising the M-pesa system he explaned the importance of mobile banking. To further develop the systems Safaricom is now targeting a slice of the commission income from the Sh12 billion annual remittances sent between Kenya and Tanzania by enabling customers in the two countries to send and receive cash through M-Pesa.
The partnership will involve working with a Tanzanian subsidiary of Vodafone, the UK firm which owns majority shares of Safaricom.
The two telcos are betting on their vast number of agents and low cost of transactions to get a piece of the money transfer pie between the two countries.
“Formal remittances between Tanzania and Kenya were around $133 million (Sh12.1 billion) in 2012, according to the World Bank. 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 the Vodafone director of mobile money and former Safaricom CEO Michael Joseph in a statement.
Under the agreement, Safaricom subscribers sending money to Vodacom’s M-Pesa network would be charged 1 per cent of the value of transaction plus an exchange rate fee. The same will also apply to Vodacom M-Pesa clients.
Safaricom has been offering one-sided international cash transfer services under a licence that only allowed it to move money into Kenya through partners such as Western Union and MoneyGram.
However, in December, The Central Bank of Kenya awarded the telco a cash remittance operating licence, enabling the telecoms giant to transfer money out of the country and opening new markets for its popular mobile money transfer service, M-Pesa.
