Equity Bank’s expected launch of a mobile phone banking and telecommunication service next month is facing a court challenge in a case filed by a consumer lobby group.
The Consumer Federation of Kenya (Cofek) has filed a suit seeking to block the award of a Mobile Virtual Network Operator (MVNO) licence to Equity Bank and two other service providers.
Cofek claims in the case filed Tuesday at the Nairobi High Court that the licences awarded to Equity Bank’s mobile banking subsidiary Finserve, Zioncell Kenya Limited and Mobile Pay Limited were given without stakeholders’ input and public consultation, despite being “scarce national resources”.
Cofek says the Communications Authority of Kenya (CAK) breached section 78 of Kenya Information and Communication Act which requires it to give 30 days’ notice prior to licensing, within which anyone can make objection.
“A conservatory order of injunction be granted to stay the decision of the first respondent (CAK) in issuing licences to the third, fourth, and fifth respondents (the three firms) and further prevent the respondents and or their agents from implementing the decision of the first respondent pending hearing and determination of this petition,” reads an order sought by Cofek.
Equity Bank and the other MVNO licences have not yet filed their responses to the case.
Tuesday, Justice Mumbi Ngugi certified the matter as urgent and directed the suit to be served and mentioned on June 26.
Cofek claims that despite the three companies indicating that they will provide mobile money transfer services, there is no indication on the necessary approvals or licences given by CBK.
The lobby group claims that despite the three firms indicating they are operating accounts and transferring money, there is no practical assurance to safeguard consumers against losses and possibility of being potential pyramid schemes.
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The petitioner also argues that the service being introduced is highly technical and multiple SIM cards may be issued to consumers yet no public education has been conducted.
CAK in April issued MVNO licences to Finserve Africa Limited, Mobile Pay Limited, owned by Tangaza Money, and Zioncell Kenya, opening a new front in the battle for control of mobile money and data service that have become the fastest-growing revenue streams for the four existing operators.