The wires reported yesterday that Safaricom, Kenya‘s biggest mobile network operator, is looking to expand the marketing of mobile phone-based banking services, boosting access to credit and insurance products for “unbanked customers”.

Cellphone companies in Kenya are turning to data content offerings such as mobile money transfer services and broadband internet to help offset expected revenue losses amid a reduction in call charges that began two months ago.

Users of Safaricom’s M-Kesho, a mobile phone-based deposit taking product that pays interest, will be able to apply for 30-day loans of between Ksh.100 (US$1.24) and Ksh.5,000 ($62) from December.

Betty Mwangi-Thuo, chief of new products, said in an interview with Bloomberg, “We are doing this for the bulk of M-Pesa subscribers who are unbanked, who haven’t had access to financial services at the next level.”

While about one-third of Kenyans don’t have a bank account and can’t get credit from lenders, 51% of the country’s inhabitants have a cellphone.

Introduced on 18 May, M-Kesho, which means “mobile tomorrow” in Swahili, enables Equity Bank, Kenya’s biggest lender by bank accounts, to tap into Safaricom’s network of almost 20,000 M-Pesa agents to offer mobile banking services to clients. About 700,000 M-Kesho bank accounts have been opened, Mwangi-Thuo said.

Insurance products offered through M-Kesho for accidents, medical and funeral expenses will also include full life insurance coverage by about mid-2011, according to a company statement.

Following on from Equity Bank, this week Barclays Bank of Kenya announced it has entered a partnership with Safaricom to also utilise the M-Pesa platform, as the banks begin to view this more and more as a quicker and cheaper way to access the “unbanked”.

Our discussions with a number of banks have been to the effect that given the nature of the account holders, particularly in the less formal economy, these accounts will not really be a source of deposits but rather will have an income statement impact via transaction fees, though it will be interesting to see how M-Kesho does in terms of being a deposit taking vehicle for Equity Bank.

Innovations surrounding the ubiquitous cellphone are cropping up in other countries too, for example, Econet in Zimbabwe recently announced a deal with Namibia’s Trustco, to pioneer the launch of free life insurance for cellphone users. Under this product, a customer will receive free life cover whenever they bought airtime. The insurance product is fully underwritten by another Zimbabwean firm, insurer First Mutual Life Assurance.

It would seem mobile banking will certainly be remembered as one of the key determinants that helped spur the economic development of the continent

Article produced by the Imara Africa Securities team. Imara is an investment banking and asset management group renowned for its knowledge of African markets.