December 26, 2008 - 3:10am
Last week Minister of Finance in Kenya initiated an audit of M-PESA which is believed to be prompted by instigations on the part of several local banks that being unhappy with the ever increasing success of Safaricom's mobile money transfer service are definitely determined to thwart M-PESA from the conducting its business. Four largest banks in the country united to form a special coalition or committee to precipitate the company.
On Monday, December 8th, the bankers appealed to Finance minister John Michuki with the statement that M-PESA was similar to a 'pyramid scheme' and that people could lose their money if it collapsed. On Thursday, December 11th, Michuki ordered the Central Bank of Kenya to audit the M-PESA service on the grounds of possible pyramid schemes. Safaricom CEO Michael Joseph welcomed the investigation as he is sure it will strengthen the customers’ confidence when they clearly see the company’s full compliance with all the anti-money laundering and Know Your Customer requirements.
The day after the audit was announced Joseph reportedly went to the Finance minister's office to clarify the situation with the M-PESA’s business strategy after which Michuki reportedly moderated his position on M-PESA. As for the banks, the main problem is the growing popularity and success M-PESA enjoys in the country with over 5,000,000 registered users and almost 5,000 registered outlets while the banks only have 750 banking outlets and 3,000,000 bank accounts countrywide. Safaricom's stated revenue for SMS, Data and M-PESA in its half year accounts released last month was Sh3.75 billion. Reportedly around Sh925 million of that was generated by the M-PESA business.
M-PESA was originally set up by Vodafone in the UK as a pilot project to increase financial access in developing countries. It was partly funded by DFID, the aid arm of the British government. Vodafone rolled out M-PESA in Tanzania in April but the take-up has been much slower than in Kenya. The banks in the country have contradictory view of M-PESA. While some banks find the service to be advantageous to partner with others see in it threats to their profits.
On Monday, December 8th, the bankers appealed to Finance minister John Michuki with the statement that M-PESA was similar to a 'pyramid scheme' and that people could lose their money if it collapsed. On Thursday, December 11th, Michuki ordered the Central Bank of Kenya to audit the M-PESA service on the grounds of possible pyramid schemes. Safaricom CEO Michael Joseph welcomed the investigation as he is sure it will strengthen the customers’ confidence when they clearly see the company’s full compliance with all the anti-money laundering and Know Your Customer requirements.
The day after the audit was announced Joseph reportedly went to the Finance minister's office to clarify the situation with the M-PESA’s business strategy after which Michuki reportedly moderated his position on M-PESA. As for the banks, the main problem is the growing popularity and success M-PESA enjoys in the country with over 5,000,000 registered users and almost 5,000 registered outlets while the banks only have 750 banking outlets and 3,000,000 bank accounts countrywide. Safaricom's stated revenue for SMS, Data and M-PESA in its half year accounts released last month was Sh3.75 billion. Reportedly around Sh925 million of that was generated by the M-PESA business.
M-PESA was originally set up by Vodafone in the UK as a pilot project to increase financial access in developing countries. It was partly funded by DFID, the aid arm of the British government. Vodafone rolled out M-PESA in Tanzania in April but the take-up has been much slower than in Kenya. The banks in the country have contradictory view of M-PESA. While some banks find the service to be advantageous to partner with others see in it threats to their profits.