CBK Directive For Free Mobile Money Transactions Faces Backlash

Banks and Telecom companies have come out to protest the Central Bank of Kenya’s (CBK) extension of the waiver on mobile money transactions to December 31, 2020.

According to Business Daily, the players in the Kenya’s financial market say CBK should have consulted them before unilaterally extending the emergency measures by six more months. The move will see the banks and Telcos lose more billions in lieu of profits in the period.

“We were not consulted given the billions we stand to lose,” said a top Safaricom executive who sought anonymity for fear of CBK reprisals.

“We should have gone the Rwanda way or at least extended for a short period.’’

Read: CBK Extends Covid-19 Measures on Mobile Money Transactions to December

CBK introduced waivers on mobile money transfers of Sh1,000 or less, and free mobile to bank transactions as a measure to encourage use of  electronic money in efforts to curb the spread of Covid-19. The measure also served to cushion vulnerable Kenyans from costs associated with the transfers from Banks and Telecoms.

According to Safaricom,the measures which were effected in March this year had seen them lose an average of Sh1.7 billion monthly in foregone profits. The latest move could see the giant Telco lose up to Ksh16.2 billion in foregone profits for the six months. This accounts for at least a fifth or 19.1 percent of Safaricom’s annual earning.

Safaricom declined to comment on the extension by CBK.

Six Bank executives said that they did not have prior knowledge of the CBK directive, as the emergency measures were more of a moral appeal than a legal order.

Read: CBK Retains Benchmark Lending Rate at 7 Percent

The Banks had intimated through their lobby group, the Kenya Bankers Association (KBA), that their members had plans to decide on the fate of the emergency measures before the CBK issued its directive.

“CBK issued the directive without consulting anyone and did not even have the courtesy of acknowledging that banks have played a huge role in the initiative,” said one executive.

The KBA Chairman and KCB CEO Joshua Oigara are slotted to meet the CBK Governor Patrick Njoroge today.

“We do not comment on matters of the Central Bank, it has made a directive and we have a meeting with the governor (today) after the MPC (Monetary Policy Committee) meeting,” Mr Oigara said when he was asked if he had prior knowledge of the order.

Kenya has so far reported 5,384 positive cases of Covid-19 since the first case on March 12.

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