NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, December 1, 2016

A Treasury report has warned that the collapse of Safaricom’s M-Pesa service would cause widespread disruption in the economy, indicating the deep entrenchment of mobile money transactions in Kenyans’ daily lives.

The Treasury’s recently released Budget Policy Statement (BPS) says that a technology disaster affecting the M-Pesa-dominated mobile transactions is now a fiscal risk, placing the money transfer systems among other potential threats to the economy that are watched keenly by policy wonks.

The authors of the report predict that an M-Pesa outage would cause loss of revenue — direct excise tax and corporate tax by firms running the systems — and reduce confidence in the services.

This is the first time the mobile money transfer system is featuring among the fiscal risks, indicative of the strategic importance it has acquired in Kenya’s economy barely a decade after the launch of M-Pesa.