M-Shwari, which is owned by lender NCBA and telco Safaricom is set to become a standalone company in the coming days. This development was revealed today and was first mentioned by publisher the Business Daily.
According to people who are privy to the matter, NCBA is already in the process of creating a new company that will handle all matters related to M-Shwari. The product, which offers loans and savings services to customers, will be led by a CEO. It will also be managed by a new board.
NCBA also owns part of Fuliza alongside KCB Bank. The overdraft facility has since grown and surpassed M-Shwari and KCB M-PESA in terms of profits many quarters ago.
Over the last couple of months, there has been a lot of pressure on the CBK to regulate the lending market, mainly for companies that give digital loans to customers without collateral. Some of these organizations have come under the radar of the CBK for personal data abuses and aggressive debt-collection methods.
It is for some of these reasons that the CBK Amendment Bill, 2021 was arrived at. It seeks to ensure that all digital lenders are registered properly, that they have a physical address, and that they abide by data protection regulations, among other measures.
Already, the Office of the Data Protection Commissioner is investigating 40 digital lenders, including Tala and Brands, for personal data abuses.
The CBK, on the other hand, has given 10 lenders a go-ahead to run their operations after they successfully reviewed their credentials. A total of 288 online lenders submitted applications to the CBK, and are in different stages of the approval/rejection process.
All this has been done to protect consumers, who have been subject to rogue digital lenders, some of whom use abusive language when collecting their dues. The CBK also wants online loan apps to be subjected to the same laws that traditional banks are guided under.
Split of mobile money services
We have also established that mobile money products, including T-Kash and M-PESA, will be split from their parent companies.
Airtel Kenya has already done so for Airtel Money, which is now under a different company named Airtel Money Kenya Limited.
The other two mobile money products will be heading in the same direction, which is sometime before the year ends or in early 2023.
The CBK says that this move is key because it will now be dispensing oversight to mobile money products, which was not the case before. The development will also be key in that the separation of mobile money services from their mother companies will help them avoid the business unpredictability that comes with running a telco.
The CBK already started the process to harmonize how Kenyans use mobile money services.
For instance, the interoperability exercise started back in 2017. This year, paybill and buy goods interoperability was launched. By 2024, agency interoperability will also go into action.