CBK renews push to ring-fence mobile money business


Airtel money staff attending to clients. FILE PHOTO | NMG

The Central Bank of Kenya has signalled renewed push for telecoms to spin off their mobile money transfer and lending units, saying this protects the entities from shocks from other business lines.

While announcing the completion of the split of Airtel Money Kenya Limited from Airtel Networks Kenya Limited on Tuesday, CBK termed it a “milestone” that will enable the new unit to “enhance governance over its mobile money business.”

The banking regulator awarded Airtel Money a payment service provider (PSP) licence on January 21 this year. The new entity took over the operations of Airtel’s money services in July.

CBK said it has engaged PSPs to ensure that the activities under its supervision are appropriately ring-fenced from other business lines.

“This will allow the PSPs to protect their CBK-regulated activities from shocks emanating from the other business activities, strengthen governance, enhance resilience, and focus on improving services to customers,” said CBK in a notice.

Safaricom has faced calls to separate its lucrative mobile money business, M-Pesa. Legislative efforts to this end have, however, not succeeded. The company initially said it would prefer not to spin off the business but has since changed its tune following CBK’s relentless push.

The company revealed in June that it was preparing for a split and would form a holding company to house connectivity, mobile money, tower, and the Ethiopian businesses as subsidiaries.

“In the future, we expect there will be a holding company, probably the listed business, and there will be quite a few businesses that operate under Safaricom,” said its CEO Peter Ndegwa.

CBK Governor Patrick Njoroge has indicated that the split could be completed by January next year.

Telkom Kenya was also expected to effect the separation of its T-Kash mobile money service alongside Airtel’s but is still yet to.

Analysts argue that CBK’s regulation of the telcos’ money market operations is poised to eliminate hurdles such as caps on the maximum money that users can transact in a day or hold in their digital wallets. The amount is currently capped at Sh300,000.

Kenya moved to bring the payment service providers under tighter CBK oversight from 2011 when the National Payments System (NPS) Act was enacted, requiring all providers to seek the CBK licence.