Grace Ashiru
Kenya’s Capital Markets Authority (CMA) has granted approval for Safaricom’s second money market product, Ziidi. This new offering, developed in collaboration with Standard Investment Bank, ALA Capital Limited, and Sanlam Investments East Africa Limited, aims to meet Kenya’s growing demand for accessible digital investment opportunities.
In 2019, Safaricom introduced its first money market fund (MMF), Mali, in partnership with Genghis Capital, a Kenyan investment bank. By November 2024, Mali’s asset base had grown to KES 3 billion ($23 million).
“The Zidi Money Market Fund is designed to empower unit holders by providing accessible and diversified investment options, aligning with the National Government’s broader financial inclusion strategy,” the CMA said in a statement on Wednesday.
When unveiled next week, Safaricom’s Ziidi will focus on Kenya’s growing retail investment market, fuelled by increasing smartphone adoption and rising digital literacy. Kenya currently boasts over 35 million active smartphones, surpassing the 30 million feature phones in use.
Ziidi aims to compete with banks, insurers, and fintech companies by channeling money market deposits into low-risk investment options such as government bonds and T-bills. Money market funds provide a low-risk alternative for savers seeking better returns than traditional bank rates. Leveraging Safaricom’s extensive network, Ziidi will target unbanked and underbanked populations, broadening access to financial services while diversifying Safaricom’s revenue streams beyond telecommunications.
Safaricom’s flagship mobile money service, M-PESA, remains its largest revenue generator, bringing in KES 77.22 billion ($596 million) in the first half of 2024. M-PESA has played a pivotal role in advancing financial inclusion across Kenya, a trend Safaricom looks to continue with Ziidi.
Ziidi MMF is the latest addition to Safaricom’s suite of M-PESA offerings, designed to bolster the mobile money platform’s service revenue as it faces challenges in its voice, data, and SMS businesses.
Details regarding Ziidi’s interest charges and tax obligations remain undisclosed. However, Safaricom’s Mali product provides a glimpse into its investment approach, allowing contributions starting from KES 100 ($0.77), with a daily limit of KES 300,000 ($2,320) and top-ups ranging between KES 100 ($0.77) and KES 70,000 ($540).
Withdrawals are processed instantly to M-PESA wallets. Associated fees include a 2% annual fund manager fee, a 0.2% trustee fee, a 0.15% custodian fee, and a 15% withholding tax on any interest earned.
