The rapid growth of money transactions via mobile phone services in East Africa has created a need for an effective legal and regulatory system, says a report by the United Nations Conference on Trade and Development on the sector.
“Developments in East Africa are of particular relevance in this context as countries in the region are at the frontier in terms of mobile money deployments and are seeking to draw maximum benefits from this new opportunity.
In this context, governments must address a range of policy challenges and issues to ensure positive outcomes from the introduction of mobile money services,” the report says.
Mobile money transfer began in Kenya with the roll-out of Safaricom’s M-Pesa service in 2007.
According to Orange Telkom chief executive officer Michael Ghossein, the mobile money industry has tried to address potential fraud and money laundering by applying time and amount limits on transactions.
“This is a new business some of whose regulations, especially in areas of fraud and money laundering, have been borrowed from the banking industry,” he told Nation on phone.
However, rules that would help the industry effect transfers across networks should be put in place, he said.
“There should be a provision that will authorise inter-network money transfers. This is what can help the market to grow beyond the current levels,” he said.
But industry analyst Thomas Makau said the market already allows for transfer of money from one area to another, something that might not require as much regulation like the banking industry.
“Any regulation put in place may only be aimed at taming the rapid growth of the mobile money market,” he said.