M-Pesa outages pose a risk to Kenyan economy, says Thugge

Central Bank of Kenya Governor Kamau Thugge when he appeared before the National Assembly's Finance and Planning committee at the Continental house, Parliament, Nairobi. October 24th,2023. [Elvis Ogina,Standard]

The economy faces a “risk” due to the recent M-Pesa outages, the Central Bank of Kenya (CBK) has said.

CBK Governor Kamau Thugge yesterday expressed the banking regulator’s concern regarding the recurring disruptions in the M-Pesa service and its impact on economic activities. 

In light of this, he said, the apex bank is currently in discussions with Kenya’s biggest telco Safaricom to find ways to mitigate the outages.

“We are in very close touch with Safaricom because of course we recognise the risk to the economy of these outages and this is an area of concern,” Dr Thugge said during a post-Monetary Policy Committee (MPC) meeting with journalists in Nairobi.

“We are in very close talks with M-Pesa to see how they can be alleviated.”

Safaricom’s mobile money platform M-Pesa has recently been hit by recurrent downtime, inconveniencing millions of customers who rely on it for payment transactions.

M-Pesa accounts for over 90 per cent of the value of mobile money transactions, underlining the entrenchment of the platform in the economy.

The platform is seen as a de facto national payment system, which makes it a critical part of the economy.

The recent M-Pesa disruption that happened two weeks ago was the latest in a series of glitches, with the service suffering an outage for several hours earlier last month and in August last year that paralysed transfers between it and banks.

The possibility of telecommunications service outages has in the past been viewed by analysts as a threat to the Kenyan economy, especially for critical services such as money transfers.

This means M-Pesa is classified as a systemic risk to the country’s economy, underlining its crucial role.

A 2016 Treasury report warned that a collapse of the M-Pesa service could, for instance, cause widespread disruption in the economy.

The recent outages saw millions of Kenyans who rely on M-Pesa for their financial transactions such as paying for utilities like electricity, fuel and parking fees or purchasing items such as food and medicine in supermarkets and chemists stranded with unpaid bills.

This prompted Parliament to summon the management of Safaricom and Communications Authority of Kenya (CA) Director General David Mugonyi.

The chairperson of the Departmental Committee on Communication, Information and Innovation John Kiarie told The Standard earlier that Safaricom and CA were expected to shed light on the successive outages.

Safaricom said in a public notice after the outage that the problem had been fully resolved.

“We experienced service intermittency with PayBill payments that resulted in some transactions not being completed on M-Pesa,” said the telco in a notice to customers two weeks ago.

“The technical issue has since been resolved, and we continue to monitor the services closely. We apologise for any inconvenience that this disruption may have caused.”

CA is permitted by law to sanction any telecommunications company that inconveniences customers through service interruptions as a result of omission on its part.

The Standard yesterday reached out to CA’s new boss Mr Mugonyi on whether the communication’s regulator was also engaging Safaricom on the outages but he had not responded by evening.

An operator found in breach risks a fine of up to 0.2 per cent of its revenues, which could run into hundreds of millions.

CA has been considering imposing steeper penalties on operators that offer poor-quality voice, data and messaging services.

Before the adoption of the 0.2 per cent gross revenue fine, firms were required to pay a flat rate of Sh500,000, which the communications regulator at the time deemed too lenient.

In 2017, the CA slapped Safaricom with a penalty of Sh270 million for failing to meet the set standards on call quality.