(Nairobi) – Safaricom has launched a new unit trust fund called Ziidi Money Market Fund, following an ownership dispute with Genghis Capital over a Safaricom-backed fund, Mali. The new fund has received approval from the Capital Markets Authority (CMA), and it will be managed by a partnership between Safaricom, Standard Investment Bank (SIB), ALA Capital Limited, and Sanlam Investments East Africa Limited.
The creation of the Ziidi Money Market Fund comes after a conflict between Safaricom and Genghis Capital over control of the Mali Money Market Fund. Genghis Capital had been Safaricom’s partner in launching the fund back in 2019. However, the disagreement centered around the entry of three new fund managers—SIB, ALA Capital, and Sanlam. Genghis Capital expressed dissatisfaction with the move, as it was initially expected to be the sole manager of the fund, which was under trial for several months.
SIB had also registered the Mali trademark name with the Kenya Industrial Property Institute (KIPI), while Genghis Capital argued that it had ownership rights to the fund due to its efforts in introducing and seeking approval for the unit trust through the CMA’s regulatory sandbox. The regulatory sandbox allows new financial products to be tested under a relaxed regulatory framework to encourage innovation and attract fintech companies.
The dispute eventually led to the formation of the Ziidi Money Market Fund, with SIB taking the lead in managing the new product alongside Safaricom. According to a top CMA executive, the battle over Mali’s ownership and branding prompted the shift toward creating the Ziidi fund. Despite these tensions, both Safaricom and Genghis Capital still have a role in the Mali fund, which remains licensed by the CMA as of the first quarter of 2023.
Safaricom had initially partnered with Genghis Capital to roll out the Mali Money Market Fund in 2019 as part of its effort to expand M-Pesa, its mobile money platform, into wealth management services. The fund targets low-income individuals, allowing them to invest small amounts as low as KSh 100 (approximately USD 0.67) through M-Pesa. The fund’s goal is to provide returns through dividends or capital growth by investing in a variety of assets, including government securities, stocks, and fixed deposits.
Despite delays in the approval process, including a pending license from the Central Bank of Kenya (CBK), Mali has managed to attract KSh 3 billion (approximately USD 20 million) in assets under management by September 2023. Safaricom’s revenues from Mali during the six-month period to September 2023 were KSh 11.6 million (USD 78,000), a significant increase from KSh 6.2 million (USD 41,000) during the same period the previous year. However, the growth in the fund’s assets has been driven primarily by reinvestments from existing investors rather than new ones.
In response to the ongoing competition in the unit trust sector, the launch of the Ziidi Money Market Fund is expected to offer similar opportunities for low-income savers with a minimum investment of KSh 100 (USD 0.67), as per sources familiar with the fund. Money market funds are the most common type of collective investment scheme, typically investing in short-term financial instruments such as Treasury bills and fixed deposits.
Safaricom’s involvement in the unit trust market is likely to intensify competition, as it enters a field already populated by major fund managers like CIC, Britam, Old Mutual, ICEA, and NCBA Group. With the CMA’s approval of 54 collective investment schemes as of October 2024, and assets under management (AUM) across these schemes reaching KSh 316 billion (USD 2.1 billion) by the end of September 2023, Safaricom’s entry represents a strong push to expand financial inclusion and diversify investment opportunities.
The new Ziidi Money Market Fund will be part of the National Government’s broader financial inclusion strategy, aimed at providing accessible and diversified investment options to more Kenyans, according to CMA CEO Wyckliffe Shamiah.