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Cofek fights off claim of bias in mobile money war

By Kenneth Kwama | July 1st 2014

Pressure is mounting on the Consumer Federation of Kenya (Cofek) to stop opposing the award of licences to Equity Bank and two other Mobile Virtual Network Operators (MVNOs) and support the venture.

The consumer body has been on the receiving end, especially on social media, over claims it was doing a hatchet job for some existing operators after it challenged the award of the licences in court.

But the federation’s secretary general, Mr Stephen Mutoro said they would stand firm.

“Some people have accused us of working for Safaricom, but this is not the case. We don’t want to get carried away by people calling us names. We want it to be clear that we don’t oppose the licensing of the new MVNOs, but the process through which it was done. We felt it was not procedural, for example, to issue the licences before consumers are educated about the implications,” he said.

The controversy

However, Mr Deogratias Kathurima, an Equity Bank agent, said the expected regime would transform the mobile money transfer market, with the proposed charges within the new structure seeing customers pay substantially lower fees than they currently are on M-Pesa, Airtel Money, yuCash and Orange Money.

“If we take the example of Equity Bank’s new regime, sending and receiving money will cost one per cent of the value. This means that a customer will part with only Sh10 to withdraw Sh100, while the maximum charged for withdrawal of any amount is Sh25. This is good for both customers and agents,” he said.

Economic think tank, Intra Region Economic Network, has also added its voice to the controversy. The organisation said the licensing would offer more transaction platforms by allowing the three new firms to issue customers with branded SIM cards and provide services similar to those offered by mobile service operators.

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“The current mobile money regime is good, revolutionary and has changed the way people do business in Kenya, and to some extent, the world over. But people feel there is need to change with the times and allow for more innovative products. This explains why there could be backlash against initiatives that seem to stifle the emergence of new players in the field,” said IREN Director James Shikwati.

During an interview after the launch of Equity’s mobile money service, CEO James Mwangi said the MVNO licence would be just one of many platforms for bank customers to access their money.

“We are not starting a new service. It is something that has been on-going, but we are going a step further by leasing unused capacity on Airtel Kenya’s network to scale up our offerings,” he said.

Consumer welfare

Cofek has had to fight off claims that it has sided with some players in the mobile money business, following its insistence that the licences granted to the three firms be revoked.

Mr Mutoro, however, said it is merely a coincidence that Cofek’s interests seem aligned to those of Safaricom, adding that the federation’s ultimate aim is to guard consumers’ long-term welfare.

“We should not get carried away by calls to have variety and more choices, but should make sure processes are in order for the sake of posterity.”

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