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Big Day To Kenyans As Safaricom Flies High

Casper Wamboko

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Photo: Safaricom Logo

The directive by the Kenyan government to give preference to online money transfers over handling cash physically due to the covid19 pandemic has been of great fortune to Safaricom PLC. The amount of revenue that is transacted on Mpesa has increased thereby increasing the company’s profits after tax.

Demand for Mpesa services had increased due to the waiver on transaction fees on the banking platform. Safaricom announced that it will return the old fees back in to use at the beginning of the year 2021, as the government also notified the public of returning the old tax tariffs that were in use before the pandemic.

Shares of Safaricom Plc. climbed to a record high of 35 Kenyan shillings on Tuesday’s trading session pushing the company’s market valuation to 1.4 Trillion Kenya shillings. Safaricom’s market capitalization at the Nairobi Stock Exchange accounts for 61 percent of the entire market valuation after the rise in the company’s share price.

Safaricom lost an average of 1.8 Billion Kenya shillings due to the free transactions it offered last year. Safaricom’s stocks surged by 7 percent, once the Central Bank of Kenya announced that the waived transaction fees would be back by January 2021, thereby influencing customers to transact more before the waivers expired. The waivers cost Safaricom an estimated 16.2 Billion Kenya shillings in revenues by the end of 2020.

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Safaricom’s half year net earnings for the period ended 31 September 2020 dropped by 6 percent to 33 Billion Kenya shillings from 35 Billion shillings on the same period, the previous year.

Safaricom expects to compensate for the drop in net profit by capitalizing on the return of transaction fees and attracting share investors, due to the great stock market performance. Market analysts advise investors that Safaricom is a viable investment in the long term, as the company’s revenues keep growing with time.

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