Why are Equitel and PesaLink not mobile agents of M-Akiba?
The banking sector in Kenya is experiencing a number of changes as the financial institutions endeavour to adapt new innovative products so as to remain relevant lest they succumb to competition. First off we had the launch of PesaLink, a banking tool meant to eliminate the reliance on mobile money transfer products namely M-Pesa from Safaricom Limited, Airtel Money from Airtel Kenya and Orange Money from Telkom Limited.
PesaLink promises to be relatively cheap compared to the mobile money products offered by the three Telkom’s. Apart from that, the transfer limit is boosted to a maximum of Ksh.999,999 as compared to the daily cap of Ksh.140,000 subjected to mobile money transfer services.
Yesterday, the National Treasury revealed its intention to finally launch the M-Akiba mobile traded government security come tomorrow Thursday 23rd March 2017. M-Akiba is aimed at driving financial inclusion in the country allowing individual investors to participate in the bond market which for a long time has been a reserve of mostly financial institutions.
Initially, the process was cumbersome requiring one to open a CDS account with the Central Bank of Kenya. The minimum investment amount was Ksh.50,000 which you could only top up in multiples of Ksh.50,000. This figure served as a barrier to most individuals.
With M-Akiba the government intends to change all this by allowing individual investors to participate in the bond market with as little as Ksh.3,000.
Most individuals in Kenya save their money with Chama’s or M-Pesa. The downside of these two platforms is that you do not earn interest on your balance no matter how long you save your money with them. Then there is the group that operates current accounts which the banks have no obligation to pay interest.
Currently the Central Bank Rate (CBR) stands at 10.0 percent. This basically translates to the cost of loans been adjusted to a maximum of 14.0 percent while your bank deposits will earn you a minimum of 7.0 percent interest. On the other hand the M-Akiba bond is set at a fixed coupon rate of 10.0 percent.
Conspicuously missing from the list of mobile agents is are Telkom Kenya, Equitel and PesaLink. Don’t you think that both Equitel and PesaLink qualify as mobile transfer agents? They might even prove to be the cheaper alternative to deal with rather than Safaricom and Airtel Kenya.
Issues that we hope will be disclosed
Come Thursday we would like the mobile operators to disclose how much it is going to cost an individual to access the service. Are there any charges for sending money? Probably the answer will be a sound yes here. Not that you will also need to withdraw that cash at some point. Not all vendors accept lipa na M-Pesa or Airtel Paybill. That is another cost that you will have to account for. Let’s not even go in to the details of how expensive this service is. If on the other hand both PesaLink and Equitel were participants, you could only withdraw all of your earnings for a maximum of Ksh.33.
At the end of it all, your 10 percent margin will definitely have to come down.