Sitoyo Lopokoiyit, M-Pesa Interim CEO
Sitoyo Lopokoiyit is a mobile financial services expert who has served since 2018 as the group CFO at Safaricom and was recently made interim CEO of M-Pesa, one of the most important African business success stories of the century. This platform has revolutionized financial services in Africa since its 2007 launch. Now grossing over 41 million customers, with 62 percent in Kenya, the Vodacom and Safaricom fintech joint venture is an undisputed market leader and game-changer. During a fireside chat at the recently held Africa Financial Industry Summit, Sitoyo discusses with the founder and CEO of Emerging Capital Group, the Nigerian Toyin Sanni, about the future of mobile money and what the innovative business has in store for Africa.
Toyin Sanni: You were recently appointed interim CEO of M-Pesa and some commentators said your main mission was to make the platform autonomous and independent of its mother companies, Safaricom and Vodacom. Is this true and what’s the idea behind this?
Sitoyo Lopokoiyit: No, that’s not true. The joint venture is a 50-50 between Safaricom and Vodacom and we created M-Pesa Africa. The intention is to accelerate the platform across our several markets and look at potential areas we could enter within the continent. We want M-Pesa to be the largest fintech and digital ecosystem in Africa and that’s the intention of setting up the JV. Kenya is well known for M-Pesa, and we’re growing in Tanzania too. Then Mozambique, DRC, and Ghana are other potential areas we are considering.
TS: You came on at a time when the coronavirus pandemic was wreaking havoc across the world. What has been the impact on M-Pesa?
SL: The pandemic has been an accelerant to digital services – look at what Zoom has done, and VISA and Mastercard in digital financial services. At M-Pesa, we have seen accelerated growth in digital adoption. In Kenya, we had 157,000 merchants at the end of March last year and by September end, we had almost 170,000. This is a massive shift towards digital channels and I think it is permanent.
TS: Over the years, M-Pesa has expanded across Africa and outside but has seemingly ignored some markets in Africa such as Nigeria. How do you see your expansion across Africa especially considering AfCFTA?
SL: The expansion strategy before was different. We were rolling out M-Pesa in markets where we had a telecom license to leverage on the synergies. But the current strategy is focusing on Africa and looking at opportunities in the continent. As we review the markets that we can enter into in Africa, we consider key things. When it comes to countries like Nigeria, I think from 2018 there’s been a big debate between bank-led and MNO-led digital channels. But right now we are focused on accelerating growth in existing markets.
TS: It is impossible to discuss the success of fintech in Kenya without the role of regulators. So, to what extent would you attribute the success of M-Pesa to the openness and flexibility of regulators?
SL: Regulators have played a big role in M-Pesa since 2007. We have worked with them every single time. There is no product and service that we launched without the regulator. We have discovered that it is better, even in the concept stage, to engage them. Regulators add a lot of value when you engage with them. In terms of their insight, we are commercially driven to transform lives but the regulator looks at it from a bigger and broader scope.
TS: Is the cost of regulatory compliance a major issue for you when considering expansion across the continent?
SL: We must provide a secure, safe, and reliable financial service platform. And if you ask me what keeps me awake, I would say it is things like cybersecurity and for me, that is not a cost. It is a must-have so I would not look at it as a cost or a barrier. I think we need to protect customers and businesses and ensure that cybersecurity and other regulatory compliance requirements are taken with utmost seriousness.
TS: After financial inclusion, what other exciting projects are you considering at M-Pesa?
SL: We are all about transforming lives. So, in this same area of fintech and mobile money, we need to start looking at areas in which we can provide savings, wealth management, insurance, to be able to support customers especially in the Covid era. I think another thing is opening up our platforms. How do we encourage more developers to come into our ecosystem and innovate? There is more innovation outside M-Pesa than inside. In Kenya, there are 29,000 developers on our platform. I would like to see 100,000 developers across Africa using our APIs to develop innovative products and services around financial health and e-commerce. This is an area I am very passionate about.
TS: What is the future of mobile money in Africa?
SL: The future of mobile money in Africa is fantastic. We are growing into digital financial services and payments. But cash is still king even in places like Kenya. I keep saying, mobile money can grow 20 percent year-on-year for the next 5 years simply because of the opportunity. Partnerships will be key as well as the technologies. We also need to strengthen fintech in Africa to be able to compete and potentially collaborate with the big tech giants such as Facebook and Google. It’s great to see what Paystack in Nigeria did with Stripe but we should be seeing 20 to 30 of those kinds of deals happening. For this to happen, it is vital to collaborate with the government – we need to support African fintech to get the valuations that fintech firms across the globe have.
TS: What is the future of M-Pesa? Is it a super app, continental, or even global digital bank, and how do these alternative paths align with the multiple and diversified series of partnerships you’ve entered into overtime?
SL: I think the way forward is a super app because of what it does. It takes the best of what we do and puts them on one app. Whether you want to travel or order food, a ride or simply want to pay for services – all of that will be within the M-Pesa app. Also, it’s a lifestyle app. I want customers to look at it as much as they do WhatsApp or Instagram every day, to watch or upload content, and play games too. It’s a superb concept. But in most of our countries, smartphone penetration is below 40 percent so we are looking at how to enhance our USSDs to have the same capabilities. As such customers can use our services both as SMEs or large companies.