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WOODLAND: Reaping the benefits of a cashless society

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A Safaricom agent transacts on the M-Pesa money transfer service which has become lucrative for agents and moves billions of shillings every day. FILE PHOTO | NMG
A Safaricom agent transacts on the M-Pesa money transfer service which has become lucrative for agents and moves billions of shillings every day. FILE PHOTO | NMG 

The rapid evolution of a digital economy, better known as “cashless society”, bears great promise for the future. At the same time, the rise of powerful players necessitates reviewing of laws and regulations on market dominance. The increasing power of innovation in the technology used for financial and mobile banking services further raises these alarms, justifying the review of competition laws.

Mobile money transactions such as M-Pesa have made the traditional economy players grow wary of immense losses in the form of eroded market power, reduced customer loyalty and erosion of direct consumer relationships.

The arrival of new non-traditional players has unequivocally raised the level of competition within the financial markets. This comes at a time when the Central Bank of Kenya (CBK) welcomed and approved the implementation of interoperability of mobile phone financial services in the country.

The mobile money interoperability platform allows customers to transfer funds across networks in real time, at a lower cost and in a financially secure environment, leveling the playing field in the mobile money market, as it equally discourages market dominance by any mobile money operator.

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As a result, two of the country’s main telecommunications company, namely Safaricom (M-Pesa) and Airtel (Money), graced a pilot project of mobile money interoperability, with Telkom Kenya similarly introducing a new mobile money platform, T-Kash—introduced in March.

This made the Central Bank of Kenya license the three Mobile Network Operators under the National Payment Systems Act, requiring them to use a payment system capable of being interoperable with other payment systems.

This platform has made the three main telcos compete in a fair market by allowing mobile money interoperability across each other’s networks.

Even though the market was made freer with intentions to erode market dominance by introducing mobile money interoperability, events witnessed recently are in stark contrast. Safaricom’s M-Pesa services left millions of Kenyans stranded as users were neither able to send nor receive money; stagnating millions of business transactions.

In a country where people have fully endorsed mobile money payment systems, the outage was as irritable as it was disruptive to the many businesses that rely on it.

The outage simply demonstrated that other telcos need to up their game, which could be attained by first identifying themselves as the best alternative, and through increasing their visibility and accessibility. Another pivotal way would be through partnering with numerous businesses to allow for mobile payments using their platforms.

It was a wake-up call to all other telcos providing mobile money services. It simply showed that they need to be more visible and accessible.

Further, with the CBK allowing mobile money interoperability between network providers and approving the three main mobile operators under the National Payment Systems Act, it beats logic to complain that one company has dominated the market since the move was intended to increase financial accessibility among all the mobile money providers and reduce market dominance.

Baston Woodland, Advocate of the High Court of Kenya.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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