Genghis Capital, a Kenyan investment bank, has accused Safaricom of “business fraud” related to the launch of a competing money market fund named Ziidi. Safaricom introduced this fund in November 2024, raising concerns about the alleged stalling of Genghis’s own fund, Mali, which was developed in partnership with Safaricom in 2020.
In a letter dated December 3, 2024, Genghis Capital claimed that Safaricom violated their partnership agreement by delaying the rollout of Mali while simultaneously working to register the rival Ziidi product. This move, according to Genghis, breaches the spirit of their 2019 partnership.
Response from Safaricom
Safaricom responded on December 6, defending its actions by citing technical issues with the Mali platform. The company stated, “As you are aware, a larger fund with these challenges would not only expose Safaricom to reputational risks, but it could also potentially result in adverse regulatory and legal action for Safaricom and Genghis.”
Privacy Law Breach Allegations
In addition to the business fraud claims, Genghis Capital has accused Safaricom of breaching privacy laws. The bank alleges that Safaricom has been migrating customers from Mali to the new Ziidi fund via the M-Pesa app without obtaining their consent, which may violate data protection regulations.
As of September 2024, the Capital Markets Authority (CMA) ranked Mali as the seventeenth-largest collective investment scheme in Kenya, with assets amounting to $23.9 million (KES 3.1 billion). In the first half of 2024, the fund generated revenue of $89,748 (KES 11.6 million) for Safaricom.
The dispute underscores the increasing competition in Kenya’s wealth management and digital finance sectors, particularly as Safaricom aims to expand its investment offerings through M-Pesa. The outcome of this conflict may have significant implications for both companies and the broader financial landscape in Kenya.
The allegations raised by Genghis Capital against Safaricom highlight the complexities and challenges in the rapidly developing financial services sector in Kenya. As the dispute unfolds, it may influence investor confidence and regulatory scrutiny in the growing market for digital finance and wealth management solutions.
