In December 2008, Finance minister John Michuki ordered an audit of Safaricom’s M-Pesa due to safety concerns regarding users’ money. The investigation has been triggered by some bankers who expressed their fears that M-Pesa’s loose regulations could be susceptible to high-tech fraudsters and money launders. Michuki said that M-Pesa features a series of inherent risks which could cause heavy losses for users. Also, local banks stated that M-Pesa should not be exempted from the Central Bank of Kenya’s (CBK) regulations since they believe it offers banking services. Safaricom CEO Michael Joseph dismisses security fears related to M-Pesa and also maintains that the service is not a banking service according to CBK’s definition. Though M-Pesa is supposed to merely be a money transfer system, the service is also used by clients to store money, to settle bills and buy services.
According to local Kenyan newspaper Business Daily, M-Pesa could be holding an average cash float of over EUR 3.8 million (KES 400 million) at any one given time. At present, M-Pesa has more than 4,000 agents sustaining its service. Safaricom data shows that cumulative person-to-person transactions reached EUR 515.7 million (KES 53.9 billion) in September 2008.
Safaricom’s M-Pesa has been operating outside Central Bank of Kenya’s regulation, unlike other money transfer services, and is awaiting the approval of a National Payments Systems Bill. Another money transfer service called Sokotele, launched by Kenyan mobile operator Zain, postponed the re-launch of its Sokotele money transfer service under the new brand Zap until the beginning of 2009. Zain has not met the full requirements set by the CBK and is currently in talks with the CBK and several other commercial banks to meet the requirements. The Kenyan government has not yet established a legal framework to guide mobile money transfer services.
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