From a Hundred Shillings: Safaricom Opens a Shari'ah Fund on M-PESA

A customer who will not take interest can now put KSh 100 from M-PESA into a fund built for that rule.

Safaricom and Gulfcap Investment Bank opened the Ziidi Shari'ah Money Market Fund on 6 October. It sits on My OneApp and on *334#. The first amount is KSh 100. After that, a top-up can be KSh 10. Deposits are free, and a withdrawal back to the M-PESA wallet is free. There is no ceiling on the fund itself.

The phone still has one: KSh 250,000 a transaction and KSh 500,000 a day. A customer can also lock the money, which is the point for someone who knows they will spend it if it sits in the wallet.

The fund is regulated by the Capital Markets Authority and watched by Gulfcap's Shari'ah board. It is not the ordinary Ziidi money-market fund. Peter Ndegwa, Safaricom's chief executive, said the point was a product that fits how customers already live.

Saud Shahbal, Gulfcap's chief executive, said the money goes only into short-term, easy-to-sell instruments at banks that do not charge interest. The return is a profit, not a rate. Capital is meant to stay intact, and the cash is meant to be available daily. That is the promise. It is not a guarantee that the unit price never dips.

What the phone already does with the same wallet

M-PESA has been a payments line for years. This is the savings side of the same menu, and it is a different product from the loan side. Licensed phone lenders had issued KSh 165.10 billion by August, a stock of debt, not a fund. A household can now borrow on the phone and, on the same phone, place KSh 100 where interest is not the mechanism. The two are not a pair.

One is a debt. The other is a unit in a fund run by Gulfcap, with Safaricom as the door.

For a saver the test is simple. The money leaves the wallet, the profit shows daily, and it comes back without a fee. Anyone who wanted the ordinary Ziidi fund already had that door. This one is for the customer who would not walk through it.