<html><head></head><body><div class="yahoo-style-wrap" style="font-family:times new roman, new york, times, serif;font-size:16px;"><div>[Link at bottom] This will be fantastic - if they succeed! <br></div><div><br></div><div>Here's a quick recap of how the Telecommunications / Fintech Apps sub-sector is exploiting consumers and stifling local innovation.<br></div><div><br></div><div><b>1. Predatory practices: </b>The mobile money sector has reached a point where lack of adequate regulation is leading to retrogressive practices that add hidden costs / friction to the economy - including:</div><blockquote><blockquote><div><b>a.</b> <b>P</b><span><b>rice-gouging </b>via r</span>idiculous pricing methodologies: Mobile "money" is just <u>text data</u> moving from A-B. There is no credible justification for pricing to be based on the transaction value or amount sent / received / withdrawn - other than, imo, ruthless exploitation of consumer ignorance! <br></div><div><br></div><div>The ethics of any company that earns super-profits in a poor third world country and still continues to do this are worth debating. <span>At scale, I would wager that each <span> P2P or bill payment </span>message costs a telecoms provider less than Ksh. 0.01 per transaction.</span><br></div><div><br></div><div>There needs to be an independent public-interest driven audit of the cost v/s pricing methodology given the <u>essential</u> and <u>imperative</u> nature of the service and the <u>lack of viable alternatives</u> due to lock-in effects. Very clear anti-trust issues at play, imo.<br></div><div><br></div><div><b><span><b>b.</b> </span></b><span><b>Usurious loans</b>, predating on the financially insecure with exorbitant fees;</span><b><br></b></div><div><b><br></b></div><div><b>c.</b> <b>Aggressive CRB listing</b> (thousands of young Kenyans punitively listed, some reportedly for as little as 200/-, which results in a tarnished record that denies youth access to other opportunities - for half a decade!);</div><div><b><br></b></div><div><b>d.</b> <b>Promoting poor financial habits</b> by encouraging people to borrow for consumption and/or to borrow "from Peter to pay Paul";</div><div><b><br></b></div><div><b>e. Aggressive collection methods</b> - including blatant violations of privacy and shaming tactics - in violation of the Constitution; <br></div><div><br></div></blockquote></blockquote><div><b>2. M<span>acro-economic stability risks: </span></b>As payments go digital/cashless, unchecked dominance by one entity has resulted in a single point of failure scenario in the economy where the country's retail and service sectors are increasingly at the mercy of one private corporation that does not appear capable of guaranteeing 100% uptime year-round (and is not keen to guarantee just compensation for traders / customers for loss of business during down-times or service delays). <br></div><div><br></div><div><span><b>3. Unfair use of market power</b> <b>to crowd out MSMEs and young indigenous innovators: </b>CA's
broad-scope licenses have created a scenario where large IT
corporations with mega budgets and market monopoly are "competing" with
(more accurately, pulverizing) innovative indigenous MSME startups. It is sad to see a company that makes billions in profits apparently even engaging in vegetable business (among others) to deny mama mboga a livelihood.<br></span></div><div><b><span><br></span></b></div><div><div><span><span><div><b>4. Money laundering risks (Unregulated Loan Apps)</b>: Some foreign-funded apps could be a possible channel for international money laundering. The in-bound capital might not follow regulated channels.</div></span></span></div><div><span><span></span></span><br></div><div><b>5. Hot money risks:</b> Foreign payday loan apps are using hot money models (short term capital allocation) to extract wealth from the country in the form of usurious interest without creating real sustainable value. This can have adverse effects e.g. on monetary policy.<br></div><br></div><div><span><b>6. Data sovereignty risks:</b> Concentration of sensitive national economic data in the hands of a single private corporation (with foreign ownership). A<span> mobile money monopoly is a bulls-eye target that attracts global hackers and saboteurs </span>due to high payoff potential.</span><br></div><div><b><br></b></div><div><b>7. Big tech is no longer innovating: </b>It is important for Government to note that, contrary to their PR claims, Big Tech players are no longer innovating - they just copy what is there and then leverage capital, network effects and media monopoly to scale even the most mediocre of ideas, distorting market forces and denying consumers the power to choose the best ideas. In healthy economies, governments solve this by create enabling environments for a new wave of innovations to emerge - via disruptive, independent startups.<br></div><div><br></div><div><span><b>8. Big tech are no longer creating new jobs (they are destroying jobs):</b></span> HR-wise, big tech are already operating at maximum efficiency with single-digit ratios (e.g. 5%) of manpower costs to revenue. At macro-level, t<u>hey are not creating more new jobs in the economy than they are destroying </u>e.g. this hidden cost is indirect e.g. when their aggressive practices demotivate innovators and/or deny startups a chance to gain traction and grow which would attract investors. <br></div><div><br></div><div><b>9. Big tech anti-trust practices are delaying the next wave of innovations: </b>In order to promote innovations in ICT (and other sectors), create jobs, and give a chance for the next "big wave of African innovation" to emerge, it is important for Government to step in and restrict Telecomms to their core business: Voice, Data and SMS. Otherwise we will only be showcasing the same old financial inclusion innovations, long after the rest of world has moved on.<br></div><div><br></div><div>It looks like parliament is very much on the right track, and the proposed measures - if successful, will go a long way towards creating an enabling environment for indigenous startups and innovators. <br></div><div><br></div><div>Kudos to Parliament for putting public interest at the forefront!<br></div><div><br></div><div>=============== Article Excerpts ================</div><div><br></div><div><span>1. "If MPs have their way, the telecommunications regulator, the
Communications Authority of Kenya (CA), will be compelled to ensure that
mobile money services like Safaricom’s M-Pesa, Airtel Money and
Telkom’s T-Kash are licensed as banks."</span></div><div><span><br></span></div><div><span>2. "<span>The telecommunication firms will then be licensed to only offer voice, data and SMS services."</span></span></div><div><br></div><div><a href="https://www.nation.co.ke/news/MPs-seek-CBK-regulation/1056-5047788-2wdi1l/index.html" rel="nofollow" target="_blank">https://www.nation.co.ke/news/MPs-seek-CBK-regulation/1056-5047788-2wdi1l/index.html</a></div><div><br></div><div>Best Regards,</div><div><br></div><div>Patrick A. M. Maina</div><div>[Cross Domain Innovator | Independent Public Policy Analyst - Indigenous Innovations]</div><div><br></div><div><br></div><div><br></div></div></body></html>