KENYA: CBK opens talks with telcos on separation of mobile money business

Kenya’s Central Bank has started negotiations with telecommunication firms with a view to separating mobile money activities from other businesses to enhance governance and minimise shocks on bank-related transactions.

The regulator said Tuesday that it has engaged Payment Service Providers (PSPs) to ensure that the activities under CBK’s supervision are appropriately ring-fenced from other business lines.

“This will allow the PSPs to protect their CBK-regulated activities from shocks emanating from the other business activities, strengthen governance, enhance resilience, and focus on improving its services to customers,” said CBK in a statement Tuesday.

According to CBK, separation of mobile money business from other businesses by telcos will facilitate realisation of a secure, fast, efficient and collaborative payment system that supports financial inclusion and innovations that benefit Kenyans.

The vision is enshrined in the National Payments Strategy (2022-2025).

The CBK statement comes after Airtel Networks Kenya Ltd (ANKL) completed the separation of its mobile money business from the telecommunications business.

This was effected by a separation and transfer of the mobile money business to the new entity Airtel Money Kenya Limited (AMKL), a journey that started in 2019.

“CBK welcomes this milestone,” the Bank said.

The completion of this restructuring enables AMKL to ring-fence its operations and focus exclusively on its mobile money business.

“Significantly, this sets the foundation for AMKL to enhance governance over its mobile money business, strengthen its operations, and offer better services to its customers,” according to CBK.

CBK licensed AMKL as a Payment Service Provider (PSP) in line with the National Payment System Act 2011 on January 21, 2022, and also granted a transition period to complete the transfer.

Both AMKL and ANKL are incorporated in Kenya as separate subsidiaries of Airtel Africa Plc (Airtel Africa).

Airtel Africa, which is listed on the London Stock Exchange (LSE), is headquartered in Dubai, United Arab Emirates, and has operations in 14 African countries.

In July this year, Airtel Africa sold 25.77 percent stake in its local mobile money business as part of a continental deal that saw the telco raise $550 million from four institutional investors.

As a result, the multinational’s interest in Airtel Money Kenya Ltd dropped to 74.23 percent in the year ended March from 100 percent a year earlier.

Similar changes in ownership of the mobile business were also witnessed in markets such as Rwanda, Tanzania and Zambia.

Airtel Money Kenya is now run and regulated by the Central Bank of Kenya as a stand-alone business.

Safaricom is also facing mounting pressure to spin off its lucrative M-Pesa business but the telco is reluctant, arguing that the service benefits from the existing synergies with other offerings including voice, data and SMS.

SOURCE: THEEASTAFRICAN