M-Pesa has turn into too massive for Kenya to fail

When senior officers from Kenya’s central financial institution appeared earlier than the nation’s lawmakers on January 20, they supplied a warning that sounded technical however carried an unusually intimate cost. If M-Pesa had been to fail, the nation’s monetary system might wobble.

It was the primary time a perception lengthy held in households, boardrooms, and authorities places of work alike had been said so plainly. Kenya’s financial system now operates via a single personal funds platform, a reality so acquainted as to have misplaced its outstanding high quality.

In a presentation delivered by CBK governor Kamau Thugge that day to a joint sitting of Parliament’s finance and public debt committees, the regulator categorised the cell cash platform as a system whose failure would “considerably impair the actual financial system.” The disclosure got here as lawmakers scrutinised the federal government’s proposal to promote a 15% stake in Safaricom—the telco that operates the cell cash platform—to South Africa’s Vodacom Group.

The central financial institution’s evaluation resembles much less a regulatory apart than a stress take a look at of the nation’s day by day life. In 2025, M-Pesa processed transactions with an financial worth of KES 83.7 trillion ($649.7 billion), about 4 instances Kenya’s gross home product (GDP): the platform now strikes more cash in a 12 months than your complete financial system produces. No industrial financial institution, funds swap, or clearing system within the nation operates at something near that scale.

In response to the regulator, it’s not solely transactional but in addition structural. An estimated KES 250 billion ($1.9 billion) in buyer funds is held in M-Pesa belief accounts throughout native industrial banks, an association designed to guard customers however that ties the platform’s stability to the banking system’s liquidity and public confidence. CBK believes a disruption at M-Pesa wouldn’t cease at delayed funds; it will present up on financial institution steadiness sheets and settlements.

Thugge stated M-Pesa’s dominance in Kenya additional raises the stakes. Safaricom controls 95% of retail cost transactions in Kenya and has over 32 million energetic customers every month—greater than half of the nation’s inhabitants.

For a lot of households and small companies, cell cash powers their day by day lives. Salaries are paid via it, provides are purchased with it, and faculty charges are despatched on it. Casual merchants depend on it to show stock, whereas digital lenders use it to evaluate creditworthiness and accumulate repayments. A chronic outage would interrupt the fundamental circulation of cash.

Options can’t match

The central financial institution additionally famous how deeply the platform is embedded in Kenya’s monetary and administrative programs, together with e-Citizen. M-Pesa is built-in with each main financial institution, Microfinance Banks (MFBs), Financial savings and Credit score Cooperative Organisations (SACCOs), dozens of fintech lenders, utilities reminiscent of Kenya Energy, county governments, the Kenya Income Authority (KRA) tax programs, and hundreds of thousands of retailers. In such a tightly coupled community, failure would cascade.

“Whereas alternate options exist, none can match M-Pesa’s attain, acceptance, and liquidity,” Thugge stated.

M-Pesa’s direct rivals embody Airtel Cash and T-Kash, operated by Telkom Kenya. Different challengers come from cost fintechs like Pesapal and Paywise, in addition to conventional banks and platforms reminiscent of Pesalink, which nonetheless depends on M-Pesa’s rails for many P2P transactions.

Even so, the numbers recommend the bottom isn’t totally fastened. Communications Authority information exhibits M-Pesa’s market share between 2024 and 2025 slipped for six consecutive quarters, edging down from the excessive of 98% to 89% as of December 2025. Whereas the shift doesn’t but threaten M-Pesa’s dominance, it complicates the thought of inevitability.

What provides CBK’s warning a political angle is its timing. The Kenyan authorities has framed Safaricom’s stake sale as a realistic fiscal measure—an try to boost capital for infrastructure with out ballooning the general public debt. Thugge stated Kenya’s public debt stood at KES 12 trillion ($93.1 billion) by the tip of September 2025, in comparison with KES 11 trillion ($85.3 billion) on the finish of June 2025.

“This revolutionary financing mechanism is optimistic as it is going to handle the infrastructure hole whereas avoiding debt accumulation,” Thugge advised legislators. “By avoiding an extra build-up of debt, this revolutionary financing will assist us transfer in direction of a sustainable debt place, and to our debt anchor of 55% NPV-of-debt relative to GDP.”

These against the deal, together with the Shopper Federation of Kenya (COFEK), a non-profit organisation that advocates for client rights, and the Legislation Society of Kenya, an expert physique representing the nation’s attorneys, cite Safaricom’s significance to Kenya’s financial system and what they time period as opacity within the course of.

“Safaricom is a Kenyan success. Allow us to not export our few successes for a track once we can simply retain them,” COFEK stated in its submission in a case looking for to cease the case. On Tuesday, two different Kenyans filed a separate swimsuit to halt the deal.

However whereas the central financial institution’s evaluation agrees that Safaricom’s most respected asset has outgrown the class of peculiar company property, the regulator insists that the partial authorities divestiture is not going to have an effect on its operations and management. Thugge stated it is going to have a optimistic macroeconomic affect, together with elevated foreign-exchange reserves and exchange-rate stability.