I blocked plans to kill M-Pesa, says Ndung’u
THE Central Bank of Kenya turned down a plea from commercial banks' chief executives in 2007 to stop the spread of mobile money service M-Pesa. CBK governor Njuguna Ndung'u yesterday revealed that some commercial banks' CEO approached the banking regulator complaining that M-Pesa, offered by Safaricom, would cause a financial crisis in the country. Though he did not name the banks that wanted to see M-Pesa dead, the governor said he did not agree with their proposal.
The unexpected M-Pesa probe ordered last week by acting Finance minister John Michuki may have been influenced by an informal cartel of local banks unhappy with the threat posed by Safaricom's mobile money transfer service poses to their business. According to well-placed sources, four big local banks have formed an "ad hoc committee" to try and get M-Pesa stopped.
M-Pesa was started by Safaricom in April of 2007 with just 54, 000 customers but spread as a wild fire in April 2007 and now has over 17 million registered users and close to 40, 000 agents. The service transacts more than Sh750 billion every year and has transacted more than Sh1 trillion since it was launched.
In December of 2008, four major banks approached the then late finance minister John Michuki asking that M-Pesa be probed arguing that it was similar to a 'pyramid scheme' and that people could lose their money if it collapsed. Michuki then ordered the Central Bank of Kenya to audit the M-pesa service saying that government and even parliament had become jittery over its increasing usage and popularity. "Pyramid schemes can use it," the late Michuki said.
But the Safaricom chief executive at the time Michael Joseph welcomed the probe saying it would reassure its users adding that M-Pesa had complied with all the anti-money laundering and Know Your Customer requirements. "We consulted with the Central Bank and we got their blessings on all the things that regularize M-Pesa," said Joseph at the time. Joseph has since been replaced by current CEO Bob Collymore.