The Central Bank of Kenya has entered into negotiations with telecom companies to separate mobile money activities from other businesses to improve governance and minimize shocks to banking transactions.
The regulator said on Tuesday that it has engaged payment service providers (PSPs) to ensure that activities under CBK’s oversight are properly isolated from other business areas.
“This will enable PSPs to protect their CBK-regulated business from shocks emanating from other business activities, strengthen governance, improve resilience and focus on improving its services to clients,” CBK said in a statement on Tuesday.
According to the CBK, the separation of mobile money activities from other businesses by telecom operators will facilitate the achievement 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 accomplished through a separation and transfer of the mobile money business to the new entity Airtel Money Kenya Limited (AMKL), a journey which began in 2019.
“CBK welcomes this important step,” the Bank said.
The completion of this restructuring allows AMKL to close its operations and focus exclusively on its mobile money business.
“Significantly, this lays the foundation for AMKL to improve the governance of its mobile money business, strengthen its operations and provide better services to its customers,” according to CBK.
CBK authorized AMKL as a payment service provider (PSP) under the National Payments 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 operates in 14 African countries.
In July this year, Airtel Africa sold a 25.77% stake in its local mobile money business in a continental deal that saw the phone company raise $550 million from four institutional investors.
As a result, the multinational’s stake in Airtel Money Kenya Ltd fell to 74.23% in the year ended March, from 100% a year earlier.
Similar shifts in mobile business ownership have also been seen in markets such as Rwanda, Tanzania and Zambia.
Airtel Money Kenya is now managed and regulated by the Central Bank of Kenya as a stand-alone company.
Safaricom is also facing growing pressure to divest its lucrative M-Pesa business, but the telecom operator is reluctant, arguing the service benefits from existing synergies with other offerings, including voice, data and SMS.