When Safaricom switched on its network in 2000, about 17,000 Kenyans owned a mobile phone. Calls were expensive, mobile phones were chunky, and connectivity was unreliable or unavailable. Twenty-five years later, the company has grown into a national utility that has influenced how Kenyans communicate, bank, trade, and access digital services.
Origins
Safaricom began as a modest department within the Kenya Posts & Telecommunications Corporation (KPTC), the state-owned monopoly operator. Launched in 1993 with an analogue network, Safaricom was a small part of the postal corporation.
The first critical steps toward its modern form came with its incorporation as a private limited liability company in 1997 and its upgrade to the global communication standard. This phase gave Safaricom a nationwide legitimacy and a structural footprint that a purely foreign entrant would have struggled to replicate.
The true catalyst for Safaricom’s growth came in May 2000, when Vodafone Group, a global telecommunications leader, acquired a 40% stake and took over its management.
This transaction injected foreign capital, technological standards, and, crucially, a new, aggressive commercial thesis. The appointment of Michael Joseph as the founding CEO in July 2000 marked the beginning of this new era. Under Joseph’s leadership, Safaricom was transformed from a company with fewer than 20,000 subscribers into a market leader with over 16 million customers by the end of his tenure in 2010.
The last piece of Safaricom’s foundational structure fell into place in 2008, when the Kenyan government offered 25% of its shares through an IPO on the Nairobi Securities Exchange (NSE). The IPO was a massive national event that allowed ordinary Kenyans to own a stake in the country’s most successful company.
The listing also diluted the government’s direct controlling interest, freeing Safaricom from the provisions of the State Corporations Act and granting it greater commercial agility and independence.
The unmatched M-PESA play
Then came M-PESA. In 2003, Safaricom partnered with Vodafone to launch a social enterprise project funded by a £1 million grant from the UK’s Department for International Development (DFID).
The initial idea sought to create a mobile-based system to allow microfinance borrowers to receive and repay loans, cutting the high costs and security risks of handling cash.
The pilot phase began in October 2005. Despite the product working for loan repayments, Safaricom and Vodafone quickly noticed that users were adapting the technology for their own purposes.
Instead of just repaying loans, people were using the platform to send small amounts of money to each other. The initial customers had discovered a far more pressing need: a safe, cheap, and reliable way to conduct peer-to-peer (P2P) transfers.
Safaricom recognised and embraced this user-led pivot. When M-PESA was officially launched to the public in 2007, it was a general money transfer service, a direct response to the demonstrated needs of the Kenyan market.
Equally brilliant was Safaricom’s decision to take advantage of its existing network of airtime resellers as M-PESA agents. Overnight, thousands of small kiosks and shops across the country, often painted in Safaricom’s distinctive green, became de facto bank branches, creating a nationwide agency network that dwarfed the combined reach of all formal banks.
Today, M-PESA serves over 32 million Kenyans and handles transactions worth over half of the country’s annual GDP. It has also inspired copycat systems across Africa and drawn global recognition from development agencies and economists alike.
The traditional banking sector, which had failed to serve most of the population, viewed the mobile money platform as an unregulated competitor encroaching on their turf.
In December 2008, a group of banks lobbied the Kenyan Finance Minister, John Michuki, and the Central Bank of Kenya (CBK), hoping to slow the service’s growth or regulate it under the stringent Banking Act. If the CBK had applied the same rules used for traditional banks, M-PESA might never have taken off.
The CBK governor at the time, Njuguna Ndung’u, recognised that M-PESA was not a deposit-taking institution in the traditional sense and allowed the “experiment” to proceed under a special regulatory framework. This decision was as crucial to M-PESA’s success as Safaricom’s innovation. It created a relationship where a flexible regulator enabled an innovation, and the success of that innovation, in turn, provided a real-world model that would shape fintech regulation across the continent for years to come
As M-PESA’s dominance became undeniable, this adversarial stance gave way to collaboration. In 2012, Safaricom launched M-Shwari, a partnership between M-PESA and the Commercial Bank of Africa (CBA), now NCBA Bank.
M-Shwari was a banking service offered directly through the M-PESA menu that allowed customers to open savings accounts and access microloans. The model was symbiotic because Safaricom gained a savings and credit product to expand engagement on its platform without needing a banking licence, while NCBA gained access to millions of potential customers it could never have reached through its traditional branch network.
But this has come with its share of criticism, alongside other later M-PESA products.
The Peter Ndegwa era
Safaricom’s current chief executive, Peter Ndegwa, took charge in 2020, becoming the first Kenyan to hold the role, succeeding the late Bob Collymore, who led the company from 2011 to 2019. Ndegwa has since had to navigate a more challenging business environment marked by inflation, new taxes on mobile money, and competition from Airtel and fintech startups.
“From the first mobile call made on our network in 2000 to becoming a key driver of Kenya’s digital economy, our story has been one of innovation, inclusion, and impact,” Ndegwa said in a statement on Friday. “We are deeply grateful to our customers who have walked this incredible journey of success with us.”
The company now focuses on what Ndegwa calls its “next chapter”, which entails expanding enterprise services, cloud computing, the Internet of Things (IoT), and regional growth through Safaricom Ethiopia.
The Ethiopia subsidiary, launched in 2022, has already attracted over 10 million customers. It is also expanding its 4G network to cover roughly half the country’s population. However, the venture has faced its fair share of challenges, including delays due to the country’s complex security situation, and recent currency reforms have increased operating costs.
Ndegwa has also been focused on moving the telco from a traditional operator into a “purpose-led technology company” by 2030. This vision entails moving beyond selling connectivity (voice and data) to becoming a digital platform that hosts several services, including financial products, e-commerce, entertainment, and cloud solutions for businesses. The development of the M-PESA “Super App,” which integrates various mini-apps from third-party providers, is an example of this strategy.
Criticism: lending, competition, and privacy
Building on the success of M-Shwari, Safaricom expanded its digital credit products with the launch of Fuliza in 2019. Fuliza is an overdraft facility that allows M-PESA users to complete transactions even when their accounts have insufficient funds. Its uptake has been nothing short of staggering. In the first six months of 2022 alone, Kenyans borrowed KES 288 billion ($2.2 billion) through the service, indicating that it had become an integral part of the daily cash flow management of millions of Kenyans.
While these products offer convenience and liquidity, they have sparked a fierce debate about social costs. Some borrowers and critics argue that the ease of access and high fees associated with digital loans create “digital debt traps.”
In 2017, a draft report by UK consultancy Analysys Mason, commissioned by the Communications Authority of Kenya (CA), concluded that Safaricom was “dominant” in the retail mobile communications and mobile money markets, with market shares exceeding 80% in key revenue and transaction metrics.
The report further argued that this dominance was not a result of superior efficiency but was sustained by high barriers to entry and strong network effects. The report recommended the separation of M-PESA from the core telecommunications business and mandatory infrastructure sharing, recommendations that Safaricom opposed and which have not been implemented to date, despite a push from Kenyan lawmakers.
More recently, these concerns have resurfaced with a formal complaint filed with the Competition Authority of Kenya (CAK) about Safaricom’s money market fund, Ziidi. The complaint alleged that Safaricom was engaging in anti-competitive behaviour by giving Ziidi zero-rated access to the M-PESA platform, meaning users can deposit and withdraw funds for free, while charging transaction fees to all competing investment funds.
The telco is also facing a lawsuit, now before the High Court of Kenya, over the alleged theft of personal data—including names, ID numbers, and betting histories—belonging to 11.5 million subscribers by former senior managers. Despite Safaricom maintaining that it has robust security controls and is committed to complying with all data protection laws, these documented lapses are eroding public trust and highlighting the company’s influence over its customers’ private information.
Safaricom transformed Kenya’s economy, connecting people, digitising money, and pulling millions into the financial system.
However, its success has bred a new problem: dominance. Its control of mobile money and data has raised questions about competition, privacy, and its closeness to the state.
Rivals like Airtel are catching up, and technologies such as Starlink threaten its core business.
Many would argue that after 25 years, Safaricom’s legacy is secure because it has fundamentally changed Kenya’s economic and social operating system. Its next big challenge is to grow beyond Kenya without using its dominance to suffocate the ecosystem that enabled its rise. Ethiopia presents a real test in this case, and unlike in Kenya, where regulators supported its early rise, Safaricom faces a tougher regulatory environment and a slower path to scale.
