Safaricom has processed over 17.1 billion zero-rated M-Pesa transactions under its Kadogo tariff plan since its introduction, the company reported this week. The Kadogo plan, specifically designed for very small-value transactions, waives transfer fees for amounts of 100 Kenyan shillings or less, a move aimed at deepening financial inclusion among low-income users and stimulating network activity.
The surge in these micro-transactions, detailed in the company's financial year 2026 report, underscores the critical role of fee structures in driving digital payment adoption at the base of the economic pyramid. By removing the cost barrier for sending small sums, Safaricom has encouraged a dramatic increase in the frequency of use, turning M-Pesa into an even more ubiquitous tool for daily financial management for millions. The company's parent firm, Vodacom Group, reported that the total M-Pesa user base across its markets now stands at 103 million, highlighting the scale of the platform.
This strategy aligns with broader industry efforts across Africa to tailor financial products for the informal sector and low-income populations. In Ghana, for instance, MTN Mobile Money recently partnered with Universal Merchant Bank (UMB) to launch a service providing informal sector operators with access to formal credit and savings products. Such initiatives recognize that achieving meaningful financial inclusion requires more than just payment rails; it necessitates integrated services that address saving, borrowing, and business management needs.
The data on Kadogo transactions provides a tangible metric for the 'digital dividend' of fee removal, suggesting that even nominal costs can significantly deter usage among price-sensitive customers. For Safaricom, the benefits are twofold: it reinforces customer loyalty and dependency on the M-Pesa ecosystem while generating indirect revenue through increased customer engagement and potential cross-selling of other services. The company has simultaneously been investing heavily in network infrastructure, adding 6,160 new 5G sites in the past year to support the growing data and transaction load.
Analysts note that while the zero-rated model for micro-transactions forgoes direct fee income, it can be a sustainable strategy for market-leading platforms like M-Pesa, which benefit from vast economies of scale and diversified revenue streams. The approach also serves a defensive purpose, making it more difficult for newer, smaller fintech entrants to compete on price for the high-volume, low-value segment of the market. The focus on micro-transactions comes as the competitive landscape in African fintech intensifies, with players across the continent seeking to lock in user bases through tailored offerings.
The success of the Kadogo plan highlights a central tension in the fintech sector between monetization and inclusion. Safaricom's ability to absorb the cost of billions of small transactions reflects its dominant position in Kenya's telecommunications and financial services landscape. For regulators and policymakers, the data may inform discussions on how to structure digital financial services to maximize public benefit, potentially through incentives for similar low-cost offerings from other providers to ensure a competitive market.