Moi family entangled in M-Pesa fund fights

A Safaricom Shop located along Kimathi Street as pictured on March 8, 2023.

Photo credit: File | Nation Media Group

The battle for control of M-Pesa-backed unit trusts has entangled the Moi family, with delays in launching the product and Safaricom forming a rival fund.

Safaricom tapped investment banker Genghis Capital as the partner fund manager for the rollout of the unit, Mali money market fund, in 2019 as the telco raced to broaden its successful M-Pesa mobile money platform into wealth management.

All seemed well until last year, when top State officials expressed discomfort with the Genghis partnership, citing the risk of relying on a single fund manager for a product that is tipped to control billions of shillings and attract millions of M-Pesa subscribers.

But behind the uneasiness, there was another factor that made the officials edgy with the Genghis Capital deal: the investment banker's link to the Moi family, say five people familiar with the product and who sought to speak in private.

A member of the Moi family is said to be associated with the new owners of Genghis Capital who bought the investment firm in 2016 from directors of fallen Chase Bank.

This was buttressed by the appointment of Gideon Moi's ally, Alex Chesosi, as chair of Genghis Capital in 2022.

"Top officials wanted more fund managers to be part of Mali. They cite the risk of one fund manager controlling the billions of shillings," said a source, who has direct knowledge of the partnership, but declined to be named.

"The association of the Moi family with Genghis is also a sticking point. Top people, including at State House have a problem with the Moi family enjoying the entire pie given their position as a mid-tier fund manager."

Mr Chesosi resigned as chair of Genghis in November 2023.

Questions over the Moi family link in the investment bank and Genghis' opposition for competing fund managers to join Mali, forced Safaricom to form a rival fund and embrace new associates.

The Capital Markets Authority (CMA) on November 27 revealed the approval of Ziidi Money Market Fund, which is a partnership between Safaricom and three fund managers-- Standard Investment Bank (SIB), ALA Capital Limited and Sanlam Investments East Africa Limited.

This got Genghis Capital upset.

The investment bank fired a protest letter to Safaricom on December 3, accused the telco of discreetly launching Zidii and declined to launch Mali.

"You refused to launch Mali in breach of the commercial partnership agreement dated 26th October 2020 despite our frequent follow-up," Edward Wachira, CEO of Genghis, said in the letter seen by the Business Daily.

Safaricom has blamed Genghis for the fund's delayed launch, terming the investment banker's tech platform rickety.

The telco declined to comment on the Moi issue as executives from the firm privately cited the links of the former first family with Genghis.

Mr Wachira on Sunday neither denied nor directly confirmed the Moi link at the investment bank.

"Someone will call you with a response," Mr Wachira said on the phone.

The Moi family have an uneasy relationship with President William Ruto.

The family, through Kanu leader Gideon Moi, the 'anointed prince' chosen by the family to lead the Moi Empire in 2020, backed opposition leader Raila Odinga in the August 2022 presidential election against President Ruto.

For the Moi family and Dr Ruto, theirs is a relationship of an adopted son who has risen to dethrone the anointed heir.

Gideon lost his Baringo senate seat while his brother Raymond was unable to contain the UDA wave in the Rongai Constituency.

Now, Gideon is seeking a fresh path after Mr Odinga and Dr Ruto came together in the aftermath of deadly protests that triggered the inclusion of opposition politicians in government.

The official ownership record of Genghis shows that the investment bank is majority-owned by a nominee account—MNW Nominees Ltd.

When asked whether the Mois own shares in Genghis, a member of the family who wished not to be identified said: "None of them do."

The new M-Pesa unit trust came amid a vicious fight for control of the Mali money market fund pitting Genghis and Safaricom after the telecom operator's plans to tap SIB, ALA Capital Limited and Sanlam Investments.

Genghis was unhappy with the late entry of the three fund managers, arguing that the model of the product—which has been on trial since 2019—was to have a sole fund manager.

SIB had registered Mali's trademark name at the Kenya Industrial Property Institute (KIPI) but Genghis Capital claimed ownership of the product on grounds it had introduced and sought approvals for the unit trust through the CMA regulatory sandbox.

The sandbox allows for the live testing of innovative capital markets-related products under a less onerous regulatory regime to spur innovations and attract fintech companies.

"In December 2019, Mali received a letter of no-objection from CMA to launch to the public," Mr Wachira told Safaricom. "In addition, Mali did in April 2022 receive a letter of no objection from the CBK."

Genghis Capital has been the fund's administrator since late 2019 when the M-Pesa-based collective investment scheme went to market on a pilot basis.

Disclosures from Safaricom show that the Mali Money Market Fund assets under management rose to Sh3.1 billion as of September, earning the telco Sh11.6 million in revenues.

In Mali, Safaricom allowed its subscribers to make small payments of as little as Sh100 via M-Pesa, which will be placed in a collective scheme for investments in assets like stocks, fixed bank deposits and government securities.

The subscribers receive a return either from dividends or capital growth of their units in the latest plan to grow the mobile money platform beyond sending and receiving cash, tapping loans as well and paying for goods to include insurance and wealth management.

CMA ranked Mali as the 17th largest collective scheme as of September 30, 2024.

Mali primarily invested in fixed deposits where it had assets worth Sh1.5 billion while its exposure to securities issued by the government stood at Sh595.9 million.

A further Sh524.3 million was held as cash and demand deposits while the balance of assets was spread across listed securities and as investments in other unit trusts.

Ziidi is expected to mimic Mali in targeting low-income savers with the minimum investment amount set at Sh100, according to a source close to the fund's operators.

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