Countrywide M-Pesa outage hits Safaricom, Kenyans again


Safaricom is in the spotlight again after the giant telco’s mobile money service, M-Pesa, experienced a massive outage less than six months after another outage crippled the service.

On Thursday, May 16, M-Pesa services were unavailable following the hitch which occurred at 1805hrs.

A message circulated online indicated that the outage had occurred at 1806 affecting all M-Pesa services.

This meant that users could not access all services including M-Shwari, Fuliza, Till payments and PayBills among others.

More than two hours later, Safaricom issued a press statement saying the service had been restored.

Investigating Safaricom

In December, Information, Communications and Technology (ICT) Cabinet Secretary Joe Mucheru ordered the Communications Authority of Kenya (CA) to work with the Central Bank of Kenya (CBK) to establish causes of the outage.

The December service blackout left millions of Safaricom’s M-Pesa customers unable to transact.

At the time, the event was estimated to have cost the Kenyan economy billions of shillings.

The outage lasted several hours leaving users unable to pay bills, shop and to send or receive money.

CA does not accept interruptions of more than one hour meaning that Safaricom faces sanctions over the outage like it did in December.

M-Pesa services restored

The telco said on Thursday evening that it had restored the mobile money transfer service after the outage.

In a statement on Twitter, Safaricom apologised for the inconveniences caused blaming the breakdown on snags affecting its database.

“We have restored all M-Pesa services following an outage that occurred 1805hrs,” the terse statement said.

After the December outage, Mucheru said that his ministry expected remedial measures Safaricom would take to ensure that such an outage does not happen again in the future.

Interestingly, the outage began at about 1830hrs and persisted beyond 2330hrs and just like Thursday’s incidence, Safaricom attributed the hitch to a database problem.

History of outages

On Monday, April 24, 2017, Safaricom was hit by an outage that left millions of customers in a communication blackout.

The outage began at about 9.40 a.m. and persisted till 4.30 p.m. with the cause not yet made public by day end.

At the time, Safaricom subscribers could not make voice calls, send text messages or transact on M-Pesa.

CA cautioned that unless the shutdown was an “act of God”, Safaricom would be sanctioned.

The outage was so bad that CA Director-General, Francis Wangusi, said the agency had to “physically” send people to Safaricom just to get an idea of what was happening.

Safaricom Chief Executive Bob Collymore said the operator had lost connectivity in its core network and the redundant path.

“This shouldn’t happen. It is unusual that both failed,” he said in a statement.

Another outage hit Safaricom in July 2017 putting the company under intense regulatory pressure.

Technological disaster fiscal risk for Kenya

In 2016, Treasury warned that a blackout on the M-Pesa platform could cost the government substantial losses in corporate tax revenue.

Treasury added that a technological disaster in the M-Pesa-dominated mobile money sector is a potential financial risk for Kenya.

Operators are required to provide redundancies for their networks by CA but the outages show that current safeguards may not be enough.

Kenyans rely heavily on mobile money transfers and network downtimes are negatively affecting financial transactions upsetting the entire economy.

Treasury’s 2016 report placing mobile money transfer systems in the ranks of potential threats to the economy.

As of June 30, 2018, mobile service subscriptions in Kenya stand at 45.5 million up from 44.1 million reported in March 2018.

Mobile money services remain dominant in the country’s economy with Kenyans transacting over KShs1.9 trillion between April 1, 2018, and June 30, 2018. This was effected in 727 million transactions.

Mobile money transfer subscriptions stood at 29.6 million with a total of 206,940 agents.

Person to Person transfers amounted to KShs675.5 billion with the value of goods and services transacted over mobile money platform amounting to Sh1.4 trillion.

How M-Pesa outage affects Safaricom, economy

In a mobile money transfer dominated market, any lag in M-Pesa services pushes customers to look for other options to conduct their business.

In addition, Safaricom faces the possibility of a fine leading to the telco facing significant losses.

Businesses that heavily use M-Pesa services also lose out during the outages.

M-Pesa agents, for instance, have to close businesses for as long as the outages last and end up losing both time and money.

While the market is skewed in favour of Safaricom due to its dominance and infrastructure, continued outages inviting competition.

The outages create opportunities for competitors to raid Safaricom for its M-Pesa customers.

To create a competitive market, mobile money interoperability in Kenya is now fully functional. This means that subscribers can move money across different networks.

However, M-Pesa still dominates the sector with over 80 per cent control of the mobile money market.

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