Safaricom’s investment scheme gets CMA’s nod
By Frankline Sunday | May 18th 2021
The capital markets regulator has approved Safaricom’s mobile investment product dubbed Mali.
The move brings the telco a step closer to launching the product that could disrupt retail investing at the Nairobi bourse.
In its latest report on the progress of various investment solutions in its regulatory framework, the Capital Markets Authority (CMA) said the collective investment scheme (CIS) developed in partnership with fund manager Genghis Capital could pose significant regulatory challenges.
“The firm initially requested to be admitted in the sandbox for three months but subsequently requested for an extension of this period to ensure wider reach of customers,” explained the CMA in its report in part.
“The firm completed running the tests and exited the sandbox and was authorised to roll out the product on a commercial scale.”
Other firms admitted into the regulatory sandbox include Pezesha Africa, Innova Ltd, the Central Depository and Settlement Corporation, Pyypl Group, Belrium Kenya Ltd and Four Front Management.
The regulatory sandbox allows live testing of innovations under a less onerous regulatory regime and is expected to attract fintech companies and capital markets licensees such as stockbrokers, fund managers, investment advisors and CIS to test the application of technology on financial services.
Mali is an investment-led application that will allow retail investors to save and invest in securities from their mobile phones.
The product is one of Safaricom’s key pillars as it divests from traditional income streams such as voice and moves into digital financial services. Safaricom Chief Executive Peter Ndegwa last week said the firm was awaiting for approval from the regulators before commercially launching the mobile investment product.
“Mali is currently waiting on decisions from our regulators and we continue engaging them,” Ndegwa said following the company’s investor briefing. As such, we cannot comment on its progress as these conversations are ongoing.”
CMA further raised concern that the massive numbers of investors involved could demand a review of the rules of conducting annual general meetings for the unitholders.
CMA further says a large number of test subjects (50,000 investors) needed to successfully test the product was beyond the sandbox risk appetite.
The approval means it now awaits a decision from other regulators such as the Central Bank of Kenya before it can roll out to market. CMA also raised concern that some of the new investment products set for introduction in Kenya’s securities exchange are too complex for the current regulatory environment.
According to CMA, several investment products including fintech and mobile investment products in various stages of testing require oversight from multiple regulatory agencies, due to their scale in the financial sector.
“Some of the applications we have received for admission into the Regulatory Sandbox are cross-cutting and have aspects where different regulators need to be engaged,” said CMA in its report. CMA launched the regulatory sandbox in March 2019 and invited firms to develop and test new solutions. Since then, 24 applications have been received and seven admitted to the sandbox.
Firms experimenting with blockchain technology and mobile investment products lead the pack.
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