Despite hype, PesaLink opportunity underutilised by banks and investors

The much touted entry of PesaLink to transact M-Akiba’s billions of shillings is yet to leave up to the hype. This is after Treasury collected only Sh23.2 million as at the close of last week’s trading posing doubt if the government will reach its target.

The entry of PesaLink was seen as a game changer and meant to increase the amount a single investor could bid. From Sh140,000 a day, and investor could now bid to as much as Sh1 million per transaction.

“PesaLink, M-Akiba subscribers will continue to enjoy tariff free subscriptions as part of our launch offer. Normal PesaLink charges shall apply after August 12,2017,” reckoned Integrated Payment Services Limited Chief Executive Officer Jennifer Theuri.

KBA Chief Executive Habil Olaka said 90 per cent of bank customers have already signed up to PesaLink with 26 banks already on board, while the remaining 16 are awaiting approvals. Rolled out in mid-February on pilot phase, the facility attracted more than Sh2.5 billion capital in the four months to June.

However, only six banks have signed up with PesaLink window hoping to capitalise on the Sh1 billion offer with a Sh3.8 billion green shoe on offer to net any extra cash. “As of today, six banks have made changes to allow for M-Akiba purchases via PesaLink,” Treasury said on Friday last week.

Commercial Bank of Africa, Prime Bank, Guardian Bank, Jamii Bora, Credit Bank and Middle East Bank have all established the link to trade the affordable bond. Missing from the list of lenders that have opted for M-Akiba are the big players like the Kenya Commercial Bank and Equity Bank, which have high asset and customers base.

CBA whose entry is a welcome relief to the government bond is the underwriter of the issue. The bank said it would accept the bond as a collateral, which means that the small investors will not need land whenever they want a loan from the lender.

“What we looked at was whether their (banks) systems were stable and whether they were willing. We gave the banks six months to enroll but there will always be those who will lag behind,” National Treasury Director General for Public Debt Management Wahoro Ndoho explained in an earlier interview.

Ms Theuri, said the true position was that all PesaLink member banks have positively embraced M-Akiba. “Seven of the banks have already completed their system tests and availed the service to their customers. The other banks are currently engaged in product tests and will progressively avail the service,” she said.

Insiders say that the problem is the terms and agreements given by PesaLink owners, the Integrated Payment Services Ltd which banks are not comfortable with. The back office discussions that roped in PesaLink last minute are said to have alienated some players.

But Theuri defended Pesalink’s position on the issue. “It is instructive to note that banking system integration are always sensitive and subject to internal information security alignments. We shall be providing further updates including volumes moved in the coming days,” Ms Theuri said.

Banks are competing with telecommunication firms led by Safaricom’s M-Pesa platform. Safaricom handled Sh142 million of the total amount, while Airtel money sold Sh8 million.

About 132,049 Kenyans are on the M-Akiba platform as potential investors.