[kictanet] Kenya’s Banks ask for regulation on Mobile Money Transfers

Tue Oct 21 17:01:55 EAT 2008

Lizette and wainaina

Banks in this country never invest in innovation.

They invest on alot of research but never innovation. Where were they when Safaricom was researching and investing on technology? regulatingg MPESA will be so catastrophic. It should just be policed but not regulated and I believe thaat if at all Bw. Njuguna and PS. Ndemo are going to fall for the tricks of these banks then we are in for intersting times.

Banks must invest in innovation and they can easily get to Kenyan universities and sponsors competitions which will bring very much good results.

JM

----- Original Message ----
From: Lizette Kraft <lfkraft at gmail.com>
To: j.maina at ymail.com
Cc: KICTAnet ICT Policy Discussions <kictanet at lists.kictanet.or.ke>
Sent: Tuesday, October 21, 2008 2:26:29 PM
Subject: Re: [kictanet] Kenya’s Banks ask for regulation on Mobile Money Transfers

Hey what's up with these Banks who give their customers a real raw deal anyway!! The banks have never done anything for the people other than use them! Now they want to crush the one system that helps and allows the rich and the poor and marginalised to send funds without having to pay the drastic fees the banks charge. Everytime there is something that works for the masses and not just the priviledged there is an uproar to defeat the purpose!! The banks need the competition so they can learn to respect all.  People in business in Kenya have for too long ripped off  the wanainchi and they will have to learn to respect the consumers. Good on CBK not to agree bring M-Pesa and the like under their ACT.  It shouldn't be allowed to operate without rules and regulations of course, to protect peoples money but we should do all possible to help technology take root that can help the people. My opinion entirely!

On 10/18/08, alice <alice at apc.org> wrote: 

       (From Balancing Act)

       Kenya's Banks ask for regulation on Mobile Money Transfers

The banking fraternity is crying foul over what it described as unfair
and increasing competition from money transfer operators. The industry
says the operators are enjoying privileges similar to those extended to
deposit taking institutions despite not being covered by the same
regulatory regime.

"Currently, there is no legal framework within which these entities
provide their services despite behaving like current account
institutions," says John Wanyela, executive director of the Kenya
Bankers Association. "If these operators want to join the financial
sector, they have to be properly licensed."

The bankers are calling on the government to subject the services to
prudential regulations "for robust and secure movement of funds across
the economy." Under the proposed guideline, the services will have to be
supervised by a specialised financial regulatory authority that will
oversee their financial soundness and stability.

Currently, the two leading mobile phone service providers - Zain and
Safaricom - are offering money-transfer services in the country under
Sokotele and M-Pesa brands respectively. Like other deposit takers, the
bankers association wants the mobile cash transfer operators restricted
on how much deposits they can take.

To avert undue competition with the banking fraternity, Wanyela says,
M-Pesa and Sokotele services have to meet the capitalisation requirement
as stipulated in the Banking Act. According to the Act, a deposit taking
institution should maintain a minimum capitalisation of Ksh250 million
($3.5 million).

This is however expected to double come December next year before
hitting Ksh1 billion ($14.2 million) by 2010 after capitalisation
requirements were amended in this financial year's budget. The bankers
also say the "digital money" has implications for the conduct of
monetary policy by the Central Bank of Kenya.

To control inflation levels in the country, CBK continuously monitors
the amount of money in circulation, mainly in the hands of people and
commercial banks. With the monies in circulation, CBK is in a position
to maintain a reserve money target and, therefore, intervene to control
inflation. Observers say it is this huge amount of money circulating
electronically that has defeated CBK in the fight against inflation.

Wanyela says it is time the government stepped in to ensure M-Pesa and
Sokotele services are regulated before "something goes wrong." Debate
has been rife on who should regulate the mobile phone money transfer
operators, with some arguing that the CBK should be party to the
issuance of guidelines as "part of M-Pesa and Sokotele services fall
under the national payments system."

Fundamentally, the two mobile operations are guided by the
Communications Commission of Kenya. Early last month, CBK said it had no
intention of bringing the mobile cash transfer services under the
Banking Act.

It claimed that treating the money transfer services under the Act may
impede competition in sector that is still at its infancy in a country
whose majority population has limited access to financial services.

Safaricom statistics show that as at the end of the first quarter of
this year, more than Ksh3.1 billion ($44.2 million) had been
transferred. From its launch in March 2007 till May this year, the
service has facilitated the transfer of more than Ksh23.77 billion
($339.5 million).
(Source: The East African)

For further information on mobile payments in Africa purchase Balancing
Act's report  "M-Money - Finances, Banking and Payments through mobile
phones"

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-- 
Lizette Kraft
P.O. Box 18488, 00500
Nairobi, Kenya
Cell: 0722-800362 

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