Companies

Safaricom hits back at Faulu over M-Shwari ownership

Safaricom is preparing for a legal battle with Faulu Kenya after the microfinance institution accused it of copyright infringement in the development of the virtual banking platform M-Shwari.

Faulu Kenya on Tuesday went to court to stop Safaricom from operating M-Shwari – a partnership between the telco and Commercial Bank of Africa (CBA) – claiming it was similar to Faulu’s Kopa Chapaa service operated by Airtel Kenya since last year after securing approvals from Central Bank of Kenya.

M-Shwari was launched on November 27 allowing subscribers make savings and get loans with the latter having a maximum value of Sh20,000 repayable in a month’s time at 7.5 per cent interest rate.

Faulu claims this service was copied from Kopa Chapaa which allows for between Sh500 and Sh10,000 loan repayable within 10 days at an interest rate dependent on the amount borrowed.

Safaricom denied the claims saying it not only fully owns the product but reads ill-intentions in the allegations.

“Safaricom seeks to clarify that M-Shwari is a banking product of the CBA and authorised as such by the Central Bank of Kenya,” the mobile firm noted in a statement sent to media houses.

“While the allegations are lamentable and unfortunate, Safaricom will seek to resolve the matter through the right legal processes and we believe this law suit is tainted with malice because it is founded on untrue allegations.”

Lawyers representing the two institutions will now face off in court on Tuesday before Justice Jonathan Havelock in what promises to be an interesting suit centred on Kenya’s intellectual property rights.

Faulu Kenya alleges it had proposed to enter into a partnership with Safaricom to deploy a similar product and says it presented a prepared concept paper detailing how the platform was going to operate.

The deposit-taking microfinance institution also alleges the two parties signed a non-disclosure agreement which it claims Safaricom disregarded in developing and launching the product.

Faulu Kenya claims that it developed the service in 2011 allowing customers to apply for money, receive and make payments through a mobile telephone network but Safaricom says it has been testing the product since 2010.

“In developing M-Shwari which is the successful result of a two-year product development process, Safaricom Limited and the CBA followed the due legal process as required by the Laws of Kenya,” the Safaricom notice added.

This is not the first time that Safaricom has been sued over the ownership of products and services.

Mr Christopher Ondieki sued the mobile provider in 2009 saying he invented M-Pesa technology alleging Safaricom implemented it without his consent.