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Daily Nation : February 27th 2014
31 | BUSINESS CASH MATTERS | Sector set to witness increased competition with more entrants Three more firms join race for mobile phone licences Nakumatt, Mobile Pay, Zioncell and Equity Bank plan to enter the Sh2 trillion money transfer services sector subject to approval BY MUTHOKI MUMO email@example.com three more companies saying they want to operate such services. Mobile Pay Ltd, which owns mo- T bile money transfer platform Tangaza Pesa, Zioncell Ltd and Nakumatt Holdings now join Equity Bank in seeking a mobile phone licence. The latest entrants are taking advantage of a new licensing regime allowing various classes of operators to run the telecommunication industry by becoming Mobile Virtual Network Operators. The aim is to own a SIM card through which they intend to roll out mobile payments services to rival Safaricom’s M-Pesa. “We need SIM cards to gain a greater market share in mobile payments. The market is dominated by one large player and we need a new tool to increase market access,” Mobile Pay CEO Oscar Ikinu said. Zioncell is an affiliate of Mobile Decisioning—a company that provides a range of mobile payment services. Zioncell has partnered with Airtel to introduce a service that is targeted primarily at church-going youth. A MVNO licence allows a company to roll out telecom services without investing in the underlying infrastructure. Instead, these firms will ride on 225 The millions of shillings paid to the matatu industry in Nairobi in terms of fare every day. The industry is expected to go electronic by July. the networks of incumbent Mobile Network Operators (MNOs). Mobile Pay, Zioncell Ltd and Eq- uity Bank Group subsidiary Finserve Africa have formally applied for the permit, which Communication Commission of Kenya says it is evaluating before making the final decision. Separately, Kenya’s largest retailer, Nakumatt, said it would target its one million local shoppers with a mobile virtual network as part of larger strategy to diversify its business, although it is yet to formally apply for the licence. “Nakumatt Holdings affirmatively confirms that such a strategic development is currently within our he fight for the control of mobile-based payments in Kenya has intensified with scope. Further information on the Mobile Virtual network operation including our preferred carrier and range of services will be, provided in due course,” Nakumatt Holdings managing director Atul Shah told the Nation. Tangaza received a licence to pro- vide cross-network mobile money transfer services from the Central Bank in 2010, but the firm has been frustrated by the protectionist strategies of other players in the mobile money sector, Mr Ikinu said. Although his firm will offer voice and data services once it gains a licence, Mr Ikinu said that it will focus its efforts on payment services. Given its track record in cashless payments, Equity Bank will undoubtedly take a similar route. Cashless payments “For the new players, voice and data are not going to be core businesses. E-commerce is becoming a big thing that this is probably what all these companies are targeting,” Standard Investment Bank analyst Eric Musau said. Low prices offered by virtual operators on voice and data could, therefore, precipitate a reduction in retail prices across the board. These companies anticipate huge revenues with the implementation of government directives on cashless payments. From April 1,all government offices will only accept cashless payments while the public transport sector has until July to ditch cash. In East Africa, there are more people with mobile phones than bank accounts. So they are an essential medium or channel for the unbanked. Financial, insurance and media companies are all candidates of virtual network operators, according to Deloitte partner Nikhil Hira Equity Bank has been particularly keen on payments in both sectors. Last year, the company launched the BebaPay service in partnership with Google, which is supposed to facilitate contact-less payments in matatus. Nakumatt last year replaced its loyalty card with a prepaid MasterCard branded card. The Nakumatt Global Card allows shoppers to earn loyalty points whenever they shop at MasterCard-accepting merchant outlets. In a statement, the firm said a licence will allow it to expand existing services. “The operation of a mobile virtual network also affords us an opportunity to advance this business to the next WHERE IT COUNTS Why the firms are fighting Money transmitted through mobile money hit Sh2 trillion in 2013. Electronic transfers by govern- ment to the elderly and orphans in 2014 — Sh12 billion Estimated daily fare paid to Matatu in Nairobi—Sh225 million expected to go electronic in July. Government payments to go electronic by April 1, Pension and insurance sectors have started collecting premiums and distributing money through mobile cash transfer. level through a variety of new generation solutions,” Mr Shah said. Nakumatt would be following in the footsteps of other retailers such as the United Kingdom’s Tesco and Sainsbury’s that have launched mobile virtual networks. However, the success of these endeavours will be no easy task. Mr Musau cautions that many MVNOs that have launched globally without a clearly defined niche market and strong distribution chains have flopped. FILE | NATION Nakumatt says it will target its over a million customers with the planned roll-out of a mobile phone service. BETTING Firm sets up Sh30m lottery in Kenya A French-based firm has joined the Kenyan lottery market after launching a Sh30 million jackpot. BR Gaming has partnered with Kenya Charity Sweepstake to roll out AfricaMillions lottery as it seeks to gain presence in the gambling industry. “We believe the market is big here. The minimum guaranteed jackpot is the biggest amount to be ever won here, and Kenyans will be excited to be part of it,” Mr Gregory Madaras, one of its directors, said. AfricaMillions lottery was introduced in July last year. DAILY NATION Thursday February 27, 2014 SECURITY Spy fears drive smartphone security businesses high. P.34 BRIEFLY SURVEY Social media the best for banks, says study Kenyans prefer to communi- cate with their banks on social media, a survey conducted by Kenya Bankers Association has revealed. It said nine out of 10 respondents would rather get in touch with their finance institutions through social media platforms such as Facebook, Twitter and WhatsApp. Traditionally, Kenyan banks have relied on phone calls, SMS alerts, email and postal mail to communicate with their customers. ENERGY Ministry to seek more funds for wind farm The Energy ministry will be seeking funds under the supplementary budget to support the Lake Turkana Wind Power Project. Cabinet Secretary for Energy and Petroleum Davis Chirchir said the government was determined to ensure that the project commences. He, however, did not disclose how much they will be seeking from Treasury for the project. “The government will continue to engage the private sector in order to ensure that the country has sufficient energy,” the minister said. BANKING CBA invests Sh311m in software upgrade Commercial Bank of Africa has invested Sh311 million in SAP East Africa software meant to enhance security and better efficiency. It protects customer accounts from fraudsters by securing online communications on the bank’s website. According to SAP East Africa managing director Andrew Waititu, the new software introduces a number of internal procedures that enable it identify false transactions and prevent frauds on customer accounts.
February 26th 2014
February 28th 2014