How Much Do You Rely On Mpesa?

Just how much did the Safaricom outage that occurred the other day impact on your daily routine such as your interactions and businesses? Admittedly, outcomes were mostly damaging, which included Mpesa inaccessibility that caused a lot of panic among Safaricom subscribers.

Before we look into the intricacies of this question, it is apparent that the Kenyan economy is deeply integrated with Mpesa services and in extension, our lives in general. In order to assess the depth of this dependence, there is need to back our assertions with a second look at the statistics, albeit briefly.

According to the report filed by the Communications Authority of Kenya, Safaricom has a total of 21,574,006 users who use their Mpesa and its associated services as of Q2 of the Financial Year 2016/2017 (the following statistics are all made in reference to Q2 2016/17). All of these users are served by 124,084 agents, and the total number transactions that were performed for this period were valued at KES 892,878,930,121.

Here is where things get interesting: of the 356,786,745 transactions made, 222,092,539 of them were commerce-based. Person to person transfers constituted approximately 47.45% of the value of transactions, while commerce transactions constituted around 45.77%.

While it is undeniable that these are impressive results for a service that was launched ten year ago, and users are acknowledging its prudent role, it is inevitable to note the risks involved for Mpesa’s ever-growing integration with a several sectors of the economy.

Based on the volume of transactions done and their corresponding value, there is need to ascertain the consequences of downtime that was experienced on April 24 that lasted for two hours or so.

The postulated loss made by Safaricom was probably over KES 40 million within that time, which rendered its cash cows (data, voice and Mpesa) inoperable. Trickling down, mobile commerce transactions that rely on Mpesa (based on its market share) were massively affected.

Person to Person Transfers

Perhaps, this was the major segment of Mpesa that affected most of its users based on the number of transactions that involve sending or receiving money.

Sports Betting Services

All of the local sports betting bookmakers have integrated Mpesa services in their platforms. Whether you place bets using online services (betting sites or their mobile application) or via short codes by text messages, you need to have cash in your Mpesa account in the first place – it is how you place your stake. Those with a lucky star have their cash deposited in those accounts as well, except for amounts that surpass the acceptable limit for Mpesa, so a winner has to collect a cheque instead.

Thus, the outage meant that users could not deposit cash to the accounts, nor could they place bets in either of the aforementioned ways. If the sudden popularity of sending text messages and internet subscriptions (as of December 2016, Safaricom owns 67.5% of mobile data subscriptions) can be tied to the influx of sports betting services (there are quite a number, including Sportpesa, Mcheza and BetIn, among others), then we have millions of Kenyans who were frustrated by Safaricom’s technical fault.

According to the Nation, Sports betting is huge; there are more than 30 betting services that have been licensed  by the Betting Control and Licensing Board (BCLB), most of which run their services on mobile platforms. Those mobile platforms include mobile money services and internet access, and these provisions are mostly met by Safaricom (again, their market share echoes this fact). Based on the last report done by PriceWaterhouseCoopers (PwC), the annual gross turnover of sports betting in Kenya was KES 2.1 billion in 2015, and gross revenue has been projected to grow up to KES 5.1 billion by 2018.

Mobile Banking

Chances are that your bank of choice has some form of mobile banking services that incorporates Mpesa. For example, Equity Bank encourages mobile banking with its Eazzy Banking application and mobile money services (via Equitel) that allows transfer of funds to and from Mpesa.

Usually, it is faster and convenient to send transact using Mpesa services; you don’t need to physically go to the bank and endure queues because they are so 90s.

Pay Bill and Buying Goods and Services  

In order to broaden the scope of the ways clients can pay for products and services, most businesses have adopted the use of this form of cashless payment. It is found in most if not all of the local supermarket chains, malls, restaurants and bars, to mention a few. However, the majority of such businesses do not rely entirely on Pay Bill services since cash payment is still the primary way of settling bills. Nonetheless, those who wanted to pay for these services were highly inconvenienced.

Taxi Hailing Apps 

Taxi fares are paid via credit cards or cash. Others such as Little accept mobile money payment via Pay Bill. Because the mode of payment is not restrictive to a single service, the only setback that taxi hailing apps faced was internet inaccessibility. Calling for ride, requires you to fire the taxi app and locate the nearest cab, which is something you could not do because of the outage that affected data. Similarly, passengers who had taken rides prior to the outage had difficulties in reconciling charges with their cab drivers. Generally speaking, a lot of taxi owners lost revenue. Clients were also inconvenienced for the same reasons.

To sum it up, such an outage has spelled out consequences including massive loss of deposits, coupled with potential loss of state revenue. As a result, market confidence runs the risk of being undermined should the situation replicate, which mounts a lot of pressure on relevant governing bodies to cover lost ground. It is the same motivation that has made the Communications Authority of Kenya to seek an explanation for the downtime from Safaricom. CA has made it clear that the telco will be punished if it is determined that the outage was deliberate.