The intuitive user interface is however backed by a maze of technology infrastructure, banking relationships and legal agreements. An important matter, which has rarely been discussed in public by Safaricom or its stakeholders, is whether or not the billions of shillings in the M-Pesa ecosystem are invested.
The next question is who benefits from the returns generated by investing the funds –a fact that has now been confirmed. Safaricom’s ultimate parent firm Vodafone Group Plc on Tuesday disclosed that it owns M-Pesa Holding Company Limited –the entity that holds and invests hundreds of billions of shillings powering the mobile money service.
The British multinational said it has signed an agreement to sell M-Pesa Holding to Safaricom for a token price of $1 (Sh137) after controlling the cash cow for about 15 years. Vodafone says M-Pesa Holding, operating as a trust, had short term investments of €1.247 billion (Sh186 billion at current exchange rates) as of March 31, 2023.
It also held M-Pesa customer funds amounting to €1.226 billion (Sh183 billion) on the same date. The multinational added that any profit generated by M-Pesa Holding is currently donated for use for public charitable purposes only after defraying direct costs.
An amendment to the trust deed creating M-Pesa Holding, and which was published by Safaricom, however shows that Vodafone was unconstrained in use of interest income derived from the mobile money cash pool.
“Any such interest or income shall generally be applied first to defray the trustee’s own costs of its role in the service but may be applied for such other purposes (whether charitable or not) as the trustee, may in its sole discretion determine,” reads clause 6.2 of the amended deed dated June 19, 2008.
The document was amended in the second week of Safaricom’s life as a publicly-traded firm following its listing through an initial public offering (IPO) on June 9, 2008.
The trust provides that M-Pesa customers are entitled only to the amounts they have deposited, also called electronic value or e-money which is convertible to the Kenya shilling less transaction costs.
“Any interest or income received in respect of any investment of the trust fund shall be retained by the trustee for its own accounts and shall not form part of or be credited to the trust fund and the trustee shall have no obligation (express or implied, and whether as trustee or in any other capacity) to account to any system participant for any such interest or income,” reads part of the trust deed.
Safaricom was appointed to act as the agent of M-Pesa Holding, performing tasks such as operating bank accounts used by the trustee to invest M-Pesa funds in short term debt securities like Treasury bills.