Ideas & Debate

Why M-Pesa agents cannot be employees of Safaricom

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Summary

  • An interesting but rather ill-informed article was published a fortnight ago, alleging that M-Pesa agents are Safaricom employees. This is a case of comparing oranges to apples and a complete misapprehension of the law.
  • Safaricom’s relationship with agents is incomparable to Uber and its drivers.
  • Safaricom enters into business relationships with its agents who are independent registered businesses.


An interesting but rather ill-informed article was published a fortnight ago, alleging that M-Pesa agents are Safaricom  #ticker:SCOM employees. This is a case of comparing oranges to apples and a complete misapprehension of the law.

The writer based his argument on two points; that English Common Law is binding in Kenya and the recent decision of the UK Supreme Court in Uber BV & Others v Aslam & others [2021] UKSC 5 holding that Uber drivers are workers of Uber applies to Safaricom and M-Pesa agents.

Is English Common Law really binding? Any decisions in the Commonwealth are merely persuasive. Various Kenyan courts have held this is the legal position and have often departed from English case law for various reasons.

The decision in Uber BV & Others v Aslam & others was on the finding that the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber. Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance. A driver is required to maintain a high rating to stay on the App. It is important to note that where drivers were signed up through an independent intermediary company, they were found to not be workers of Uber.

Safaricom’s relationship with agents is incomparable to Uber and its drivers. Safaricom enters into business relationships with its agents who are independent registered businesses. An individual cannot be an agent. The relationship is purely between one business and another evidenced by the execution of a contract. The agents put up their own capital as ‘float’ to support their end of the contractual obligations. The ability to raise float is prerequisite to the relationship. This float is what is used to convert hard cash into e-money or mobile money. Thus, an agent is merely a third-party intermediary that supports the flow of e-money between Safaricom customers.

An agent is at liberty to operate as an agent of any other mobile money transfer provider or bank. Most agents operate other unrelated businesses like shops and bars on the same premises. The writer raised a few questions regarding this relationship that we can examine practically and I am quite suited to do so as I have operated an agent business.

Once an agent downloads an M-Pesa app, can he vary the terms with Safaricom? Agents do not use any apps and are not required by Safaricom to download any app. The M-Pesa agent service runs on USSD. Most agents use what we call ‘kabambe’- feature phones. The transactions carried out by customers are reflected in SMS notifications to the Agent’s number as confirmation that the transaction is genuine and the agent can either use their float to give cash in the place of e-money or they may accept cash for it to be converted into e-money.

Can the agent decide what commission rate to charge M-Pesa customers? The answer is no, and neither can Safaricom. Mobile money charges are based on rates that are pre-approved by the Central Bank of Kenya and so no one can set or vary the commissions or rates at will. This is why the Central Bank of Kenya was able to waive fees for transactions below Sh1,000 for the most part of 2020 to support Covid-19 mitigation measures.

Can an agent refuse a request for M-Pesa service from a customer? Yes, an agent can refuse to offer services to a customer for any reason varying from lack of float, their phone not working, to the agent’s employees not liking the customer at first sight. The refusal is not used to rate the agent or in any way penalise them.

Can a bank like KCB refuse to provide M-Pesa services? Yes, there is no obligation whatsoever for any business to carry M-Pesa services. Where the banks offer the services, it is purely as a business decision. Almost all banks now support mobile money integration and we cannot ignore the fact that banks support other providers besides M-Pesa. This is a result of the organic growth of use of mobile money as the most popular, no frills mode of payment and money transfer in Kenya.

The writer argued that a bank acting as an agent or anyone operating an M-Pesa kiosk should be considered a subsidiary of Safaricom. A subsidiary is an entity fully owned and controlled by another. Banks are separate regulated businesses.

The principles of law of contract are still applicable under all law whether Kenyan or English and its clear the relationship between Safaricom and its agents is contractual between two businesses.

Employees of banks or agents should not be misguided to waste judicial time or even worse, quit their jobs chasing non-existent recognition. Such action is akin to fishing in the desert.