House team halts Equity Bank's thin SIM venture

National Assembly Energy Committee members. [PHOTO:BONIFACE OKENDO]

NAIROBI, KENYA: The battle between Safaricom and Equity Bank over the control of the country’s lucrative mobile money market boiled over after a committee of the National Assembly directed the industry regulator to halt the roll-out of the thin SIM card technology.

The House committee on Energy and Communication has formed an 11-member committee led by Rarieda MP Nicholas Gumbo to supervise investigations into the technology following fears expressed by Safaricom that the roll-out could expose customers’ private data to illegal access.

Committee Chairman Jamleck Kamau led members of the committee in asking the Communications Authority (CA) to put brakes on the roll-out process, which has seen a push-and-pull between the two companies.

“This is a decision of this committee. We are apprehensive of the thin sim technology. The standing orders of the House allow for independent investigations by experts to look into such matters. The matter is now under investigation. If the process continues, CA will face the consequences,” warned Mr Kamau.

“The decision by the CA is an indictment on their part. Why didn’t they test the entire system before proceeding with the licencing,” Gumbo asked.

The awarding of the licence to Equity bank to enter the mobile money market set off alarm bells at Safaricom House, which then fired a letter to the regulator warning that the technology had the ability to quietly steal data from the main SIM, including the secret personal identification numbers and pass them to a third party.

The position taken by the MPs is therefore likely to be sweet music to Safaricom. It is however not clear if CA will heed the MPs’ calls as the authority is established as an independent regulator.

Igembe South MP Mithika Linturi warned the authority against defying the position adopted by the committee. “They could be independent regulators but they are not independent of the National Assembly’s oversight role,” he said.

Equity Bank, which plans to enter the market through its fully owned subsidiary Fin Serve Africa, has defended the roll-out, arguing that the process will be accompanied by expert investigations into the security of the system.

Other MPs who attended the press conference were Kanini Kega (Kieni), Moses Kuria (Gatundu South), Joe Mutambo (Mwingi Central), Roba Duba (Moyale).

Earlier this week, Safaricom lost the battle to stop Equity Bank from rolling out their thin SIM card technology, which will go head-to-head with their top product, M-Pesa.

The CA and Central Bank of Kenya both gave the green light to Equity Bank’s subsidiary Finserve Africa to roll out on a one-year pilot basis.

This, they said, would give them enough time to study and monitor the technology to see if it is fully safe. If any vulnerabilities are found within the period, the service would be discontinued.

Earlier, the MPs said they would not make a decision on Equity Bank’s use of the thin SIM and the security flaws raised by Safaricom about the thin SIM, until they have heard from the CBK board and the CA board.

The new position adopted by the committee could, however, attract criticism that the legislators may have been caught in a war pitting two influential players seeking to reap from one of the fastest growing sectors in the region.

While one of the players is keen to protect its traditional goldmine, the other wants to upset the apple cart and hive off a slice of the lucrative market.

The history of the two firms tells of two influential entities with requisite economic and political clout to protect their economic turfs.

In an indication of the cut-throat struggle for customer’s pockets that could ensue should the roll out successfully take place, Equity Bank has announced that it will charge a maximum of Sh25 for amounts transacted.

This would be a major market coup whose chief beneficiaries would be the customers.