The number of mobile money transactions declined by 7 percent in September compared to the start of the year, according to the latest data from the KNBS.

The total value of the transactions between January and September this year was about KSh 6.5 trillion compared to KSh 5.8 trillion in the same period last year. The growth can be attributed to the change in transaction policy by Airtel in August last year – raising its transaction limit to KSh 250,000 from KSh 150,000 after engaging with the Central Bank of Kenya (CBK). 

The Telco also maintained the transaction charges for this band, retaining the fees set initially for transactions between KSh 70,001 to KSh 150,000. This was intended to make higher transactions flexible and relatively cheap, allowing intensified use of mobile money services by businesses. 

Mobile Money remains an invaluable resource for financial inclusion in Kenya. According to CA data, mobile money subscriptions stood at almost 40 million in the country – translating to a 77.3 percent penetration rate. Safaricom’s M-Pesa remains the leading service garnering 93.4 percent of the market.  

The prominence of mobile money has drawn interest from lawmakers who want the services to be divested from their respective telco providers.  

A bill in parliament codifying this requirement is set to enter the committee stage for clause analysis. Safaricom has expressed dissatisfaction with the bill, realising how invaluable M-Pesa is to their revenue dominance. 

The taxman also wants his share from the lucrative spoils, determining mobile money as an avenue for expanding the tax base. KRA has noted its intention to convert mobile Paybill and till numbers into Electronic Tax Registers (ETRs) that will nab tax evaders and ensure informal businesses bear their revenue burden. 

KRA has also rallied for the authentication of phone numbers on the iTax system. This is also intended to trace informal traders’ money transactions and quantify how much they should pay as taxes. 

This has prompted an uproar from Kenyans who believe that the authority’s inroads into the mobile money sector will push many into the cash economy as a way of protecting their privacy. 

On the other hand, Members of Parliament debated the Kenya Information and Communications (Amendment) Bill 2022 on Wednesday last week, hastening the intention to split mobile money services from their umbrella telcos.

“The amendment will further aid in control of anti-competitive practices by large industries in the sector,” the bill says. 

The amendment bill was introduced on October 2022 by Elisha Odhiambo (Gem, ODM). After the second reading, MPs will vote for its approval where it will sail through to the committee stage. In this stage, MPs will analyse each clause and assess which ones will be struck off or remain. 

In April this year, Safaricom expressed dissatisfaction with the provision to split up its voice, data, and text services from their mobile money businesses. The proposal to break up telcos and their mobile money services was detailed in the Kenya Kwanza manifesto to the run up of the 2022 elections. 

“Effective immediately after forming the government, the administration will seek the breakup of Safaricom into two distinct and separate entities with a mobile telecommunications institution under the direct jurisdiction of the Communications Authority and the financial institution under the jurisdiction of the Central Bank,” part of the manifesto said. 

Safaricom’s M-Pesa is the domineering mobile money service in Kenya, owning 95% of the market share. If such a move is taken, M-Pesa will need to adjust many aspects of its operations. If controlled by the CBK, M-Pesa is likely to morph into a digital bank competing against other commercial banks and broaden its transactional limits. 

Telcos may also have to lower their transaction costs which they fear would diminish their revenues. Safaricom had lamented earlier this year that it faced a KSh 75 billion tax liability. CBK, which is pushing for the bill, said that Treasury will meet with the telco in order to generate a tax waiver plan. 

According to the banks’ regulator, this would streamline the progression of breaking up mobile money services from their respective telcos. M-Pesa’s transactions recorded more than KSh 35 Trillion in 2023, rising from KSh 29.6 trillion in 2022. 

Safaricom’s innovative grind has slowed down over the years as its core business matures. M-Pesa remains an invaluable segment of its business surpassing voice revenue by almost KSh 40 billion last year.