Safaricom PLC has received the green light from the Capital Markets Authority (CMA) to launch the Zidi Money Market Fund, a Collective Investment Scheme (CIS) that will be accessible via the M-Pesa app. This is yet another move by Safaricom to bolster its presence in the financial services sector, leveraging its flagship mobile money platform, M-Pesa, to provide convenient investment options.

What is a Money Market Fund?

A Money Market Fund (MMF) is a type of investment that pools money from multiple investors to invest in low-risk financial instruments like treasury bills, commercial papers, and fixed deposits. These funds provide a way for investors to earn competitive returns while keeping their money relatively safe and accessible.

For individuals, money market funds offer an opportunity to grow wealth without the complexities of directly engaging in the stock market or other riskier investments. They are particularly appealing for short-term savings, offering liquidity (easy access to your money) while earning better interest compared to traditional savings accounts.

What is a Collective Investment Scheme (CIS)?

A Collective Investment Scheme (CIS) is a regulated structure where multiple investors pool their funds to invest in various financial assets, such as bonds, equities, or money markets. CISs are professionally managed and regulated by the CMA to ensure transparency, proper governance, and investor protection. This setup allows individual investors to access diversified portfolios and professional expertise that would otherwise be challenging to achieve independently.

Zidi Money Market Fund: Safaricom’s Latest Financial Product

The Zidi Money Market Fund is the result of a partnership between Safaricom and three fund managers:

Standard Investment Bank
ALA Capital Limited, and
Sanlam Investments East Africa Limited.

The fund will be integrated into the M-Pesa app, allowing users to conveniently save and grow their money with a few taps on their smartphones.

This development mirrors the structure of Mali, Safaricom’s first money market offering, which launched in November 2022. Mali was developed in partnership with Genghis Capital Limited and has grown significantly, boasting an asset base of KES 2.3 billion as of August 2024. Like Mali, Zidi will allow users to invest small amounts, earn daily interest, and withdraw their money at will.

Zidi vs. Mali: What’s the Difference?

While both Zidi and Mali offer money market investment options through M-Pesa, Safaricom has not clarified the key differences between the two products. The primary distinction appears to be the fund managers involved. Zidi is supported by Standard Investment Bank, ALA Capital, and Sanlam, while Mali is run in partnership with Genghis Capital. This means users may experience differences in terms of fund performance, fees, or additional features, depending on the specific management strategies of each product.

Interestingly, both products will seemingly coexist on the M-Pesa app, potentially giving users more choice and flexibility when deciding how to invest their money. However, Safaricom has yet to address whether Zidi will complement or compete with Mali, leaving users to weigh their options based on available information.

Why Money Market Funds Matter on M-Pesa

M-Pesa, Safaricom’s mobile money platform, has evolved into a powerful financial ecosystem, offering users services beyond sending money and paying bills. Through the M-Pesa app, users can now access mini-apps from different businesses, including banking, insurance, and investment solutions.

By introducing money market funds like Mali and Zidi, Safaricom is creating opportunities for its vast customer base to grow their wealth. These services align with the government’s financial inclusion goals by making investment products more accessible to everyday Kenyans who may lack access to traditional financial markets.

The convenience of integrating Zidi and Mali into the M-Pesa app allows Safaricom to tap into its millions of users, offering a seamless entry point into the world of investments. With the app’s simplicity and wide reach, these funds are expected to attract a diverse group of investors, from individuals saving for short-term goals to small businesses looking to optimize idle cash.

CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, emphasized the significance of the approval, stating that it reflects the regulator’s commitment to fostering innovation in Kenya’s financial markets. The CMA, established in 1989, oversees the licensing and regulation of capital markets in Kenya, ensuring fairness and investor confidence.

By securing CMA approval, Zidi Money Market Fund demonstrates its compliance with the necessary regulatory standards, providing investors with assurance of transparency and security.

What’s Next?

The big question remains: will Safaricom eventually streamline or differentiate its offerings to clarify the roles of Zidi and Mali? For now, Kenyans stand to benefit from more options, enhanced financial inclusion, and the opportunity to grow their wealth with the click of a button.