Safaricom customers can now buy shares listed on the Nairobi Securities Exchange using their Bonga points, marking the first investment option for redeeming the loyalty awards whose outstanding value was Sh4.2 billion in the year ended March.
The telco announced Monday that it has partnered with the Nairobi bourse operator in a deal that will see its customers get Sh1 for every five loyalty points and use it to invest in stocks.
The offer is a departure from the current arrangement where customers have been using their accumulated points for consumption needs such as purchase of phones, accessories, air tickets, shopping, fueling cars and paying education loans.
“Through this partnership with NSE, we seek to give our customers more value and utility for their Bonga points while creating more avenues for driving economic empowerment,” said Peter Ndegwa, Safaricom’s chief executive.
The option comes on the back of the value of unclaimed Safaricom customer loyalty awards hitting Sh4.2 billion all-time high in the year to March compared to Sh3.9 billion the year before.
Points redemption is crucial for Safaricom since the points are accounted for as a liability or deferred income in the telco’s books and only recognised as revenue once they are utilised by customers.
Ten trading participants in the partnership include NCBA Capital, Faida Investment Bank, AIB-AXYS, ABC Capital, Old Mutual Securities and Kingdom Securities.
Other brokerage firms where customers will be allowed to redeem their points for publicly-traded shares are Suntra Investment Bank, Francis Drummond & Company, Dyer & Blair Investment Bank and Sterling Capital.
Customers who have not opened accounts at the Central Depository and Settlement Corporation (CDSC) will have to register first before accessing this option via short service code or Safaricom app.
NSE’s chief executive Geoffrey Odundo said the move represents a convenient and innovative solution that will help attract more retail investors to the bourse.
“The partnership resonates with our resolve to connect capital with opportunities as anchored in the NSE 2020-2024 strategic plan. It further provides an avenue for retail investors to participate in the NSE and is coming on the backdrop of the stock market’s recovery following the Covid-19 pandemic,” said Mr Odundo.
The Bonga point scheme, introduced in January 2007, gives subscribers one Bonga point for every Sh10 spent. This runs for both individual subscribers as well as enterprise business customers.
Enterprise business customers also earn loyalty points when they achieve their revenue targets and redeem the points at the completion of revenue contracts with the Safaricom.
Sourced from Business Daily