Kenya: Safaricom Changes Method of Recruiting M-Pesa Agents

Mergers, Acquisitions and Financial Results

Leading mobile phone provider, Safaricom, is changing tack on its method of recruiting mobile money transfer, M-pesa, agents by introducing a new system known as Aggregator Model, which removes the need to deal directly with sub-agents.

In the new model, the appointment of the sub agents will be handled by the agents on its behalf especially in Nairobi and areas that it considers highly saturated by agents. The move is likely to keep doors open for entrepreneurs who may be interested in the sub-agency contract with the mobile firm.

Although, the implementation of this model started before the launch of a money transfer service yuCash by its rival, Essar telecom Ltd, their approach in handling the money transfer agents are similar in that both companies plan to deal with a limited number of agents.

In the case of Safaricom, it is these agents who will be getting floats from their super agents, normally banking institutions which they have arrangement with, then pass the details to the sub-agents who will then work on agreed commissions by the agents.

Essar, on the other hand, has eliminated altogether the need for sub-agents so as to ensure that agents get maximum commission, which it says is yet to be finalised but will be competitive.

Safaricom says its move is motivated by the need to protect its partnership with the existing agents. However, this is pegged on the demand for the service and if need be more agents will be recruited. Safaricom chief executive Michael Joseph said the company is convinced that the existing agents have the capacity to serve Nairobi and other areas adequately.

"We have begun migrating existing sub-agents under the agency model to Aggregator," said Joseph. "This means a situation where Safaricom appoints an organiasation/agent which in turn appoints sub-agents on its behalf. This exercise has started and should take between 6 to 8 months" In the Aggregator Model, Safaricom and its agents are targeting social places with high traffic such as eateries and entertainment spots.

Of late, the company has been enhancing its offering on M-pesa jointly with partners such as the transport sector. Travellers can now book online and pay for flights or bus tickets through M-pesa. Safaricom has more than 12,000 agents in Kenya and in the UK, where it recently launched an international money transfer service. Zain has a network of 6,000 agents in Kenya.

Essar wants to recruit 3,000 agents between now and March next year and has lowered the mandatory deposit for its agents. Potential agents are required to pay only Sh50,000 in deposits, half the Sh100,000 that Safaricom and Zain demand from their agents.

Yu said it was going into direct dealership agreements with the agents and will not allow sub-agents who have denied thousands of entrepreneurs the opportunity to realise the full benefits of the business. M-pesa currently has 7.6 million users compared to Zap's 400,000. Total monthly mobile money transactions are currently valued at Sh20 billion.

Business Daily