Alibaba's AliExpress has signed a deal with Safaricom's M-Pesa in a bid to cater to Kenyan online shoppers. The mobile payment deal will also help the Kenyan firm extend its service base outside the country.
According to Business Live, Safaricom confirmed that the deal will allow the Kenyan company to use its M-Pesa payment service on one of the Chinese retail giant's platforms as part of its plans to expand globally.
While the agreement will take effect in a few weeks, the company expressed optimism over the benefits of the deal. Safaricom Chief Customer Officer Sylvia Mulinge said, "As our customers get more digital, they want to shop in a more digital kind of a format, that's why we are seeing e-commerce growing."
In a statement, the Kenyan company said the deal aims to serve micro traders in the country. Majority of Kenyan micro traders obtain items from Chinese manufacturers so the firm believes the joint venture will further strengthen business ties between the two countries.
The deal will states that Alibaba's affiliate, Ant Financial, will offer M-Pesa as a payment option for Kenyan shoppers who will purchase items through the Chinese online retailer's portal. The agreement allows for payments without the use of a credit card, improving customer experience.
Over the past couple of years, Kenyans have been relying on online shopping as a major purchasing source. More people are gaining access to the internet, allowing for M-Pesa to benefit from increased internet use, The Kenya Star reported.
According to data compiled by the Communication Authority, e-commerce accounted for a total of 76 percent in mobile money transfers and transactions between July and September 2018. A total of 526.9 million e-commerce transactions were made by online shoppers last year.
To date, Alibaba's AliExpress accounts for 46 percent of the country's international purchases through e-commerce portals. Other online purchases were made with American retailer Amazon and eBay.
Safaricom has an e-commerce platform, Masoko, and while some industry analysts expressed concerns over how the deal will impact the firm's own portal, Mulinge said it will not have a negative effect on Masoko. Mulinge explained that the AliExpress joint agreement has a different priority than that of Masoko as it will address the needs of local traders.
M-Pesa is Safaricom's arm that has helped boost company profits, Reuters reported. It helped promote the Kenyan telecom giant's services department and it is expected to continue driving growth through its Alibaba cooperation.
