Members of Parliament debated the Kenya Information and Communications (Amendment) Bill 2022 on Wednesday last week, hastening the intention to split mobile money services from their umbrella telcos.
The bill is seeking to improve the quality of these mobile money services by compelling them to obtain licenses from the Central Bank of Kenya (CBK). All major telcos in Kenya have mobile money services which oversee transactions worth billions of money every day, prompting legislators to propose stiffer regulations. MPs also want separate accounts and reports created for mobile money services in order to exercise more scrutiny on the services. “The amendment will further aid in control of anti-competitive practices by large industries in the sector,” the bill says.
The amendment bill was introduced on October 2022 by Elisha Odhiambo (Gem, ODM). After the second reading, MPs will vote for its approval where it will sail through to the committee stage. In this stage, MPs will analyse each clause and assess which ones will be struck off or remain.
In April this year, Safaricom expressed dissatisfaction with the provision to split up its voice, data, and text services from their mobile money businesses. The proposal to break up telcos and their mobile money services was detailed in the Kenya Kwanza manifesto to the run up of the 2022 elections.
“Effective immediately after forming the government, the administration will seek the break up of Safaricom into two distinct and separate entities with a mobile telecommunications institution under the direct jurisdiction of the Communications Authority and the financial institution under the jurisdiction of the Central Bank,” part of the manifesto said.
Safaricom’s M-Pesa is the domineering mobile money service in Kenya, owning 95% of the market share. If such a move is taken, M-Pesa will need to adjust many aspects of its operations. If controlled by the CBK, M-Pesa is likely to morph into a digital bank competing against other commercial banks and broaden its transactional limits.
Telcos may also have to lower their transaction costs which they fear would diminish their revenues. Safaricom had lamented earlier this year that it faced a KSh 75 billion tax liability. CBK, which is pushing for the bill, said that Treasury will meet with the telco in order to generate a tax waiver plan.
According to the banks’ regulator, this would streamline the progression of breaking up mobile money services from their respective telcos. M-Pesa’s transactions recorded more than KSh 35 Trillion in 2023, rising from KSh 29.6 trillion in 2022.
Safaricom’s innovative grind has slowed down over the years as its core business matures. M-Pesa remains an invaluable segment of its business surpassing voice revenue by almost KSh 40 billion last year.
