Must Read of the Week:
Lauded as the gold-standard of mobile money, Safaricom’s M-PESA may soon be coming under new scrutiny through new regulations being established by the Communications Authority of Kenya (CA). The new regulations, titled the Fair Competition and Equality of Treatment 2015, require telcos to maintain separate books of account for each of its services – for example, separate books for its mobile money account, mobile phone services, and infrastructure. These separate entities would then be regulated by separate bodies at the CA who would ensure that, for instance, SMS and internet prices are controlled to ensure that they are equal or slightly higher than other companies.
The new regulations will also attempt to define a ‘dominant player’ in the market as one who can “maintain or erect barriers to entry into the market, including, by means of control of essential facilities, access to superior technology, privileged access to resources or capital markets or superior buying or negotiating position, among others.” Such a player must also have a market share of 50% or more. The latest industry statistics show that Safaricom controls all segments of the telecommunications market — voice (75.6%), SMS (93%), mobile data (70%) and mobile money (66.7%).
A commonly cited reason for M-PESA’s unprecedented mobile money success was the ‘wait and see’ approach taken by Kenya’s regulatory authorities. Due to this, Safaricom was able to build off the rails already established through their mobile phone service, offer a P2P service that was more efficient and safer than traditional means (especially during Kenya’s period of unrest), establish the trust of Kenya’s population, and the business has grown from there. As of 2014, M-PESA had 19 million registered users, 12.7 million of whom are active, 6 million daily transactions, and an agent network of 80,000.
While these new regulations would impact Safaricom’s structure, and the regulations enforced upon all of its business, we fully expect M-PESA to continue being the predominant mobile money service in Sub-Saharan Africa.