CONSUMER
PROTECTION IN DIGITAL
FINANCE
SUBTITLE
CONTENT LAYOUT
Consumer protection and Competition
Background to Digital Finance in Kenya
Progress made and Challenges in Digital finance
consumer protection
Recommendations
COMPETIITON AND
CONSUMER PROTECTION
WHAT IS COMPETITION?
 The process of rivalry between firms striving to gain sales and make profits
Motive: Self interest
The outcomes are mostly beneficial to the society as a whole i.e both producers and
consumers
Competition is a process
It doesn’t happen automatically it is natured
4
BENEFITS OF COMPETITION
 Producer Benefit
 Market predictability
 Efficient allocation of resources
 Innovation
 Ease of market entry and exit
 Consumer Benefit
 Lower prices
 Better quality of goods
 More product (goods & services ) choice
 Easy access to goods and services
5
IMPEDIMENTS TO COMPETITION
 Government Policies
 Limits the number or range of suppliers
 Limits the ability of the suppliers to compete
 Reduce the incentives of supplier to compete
 limits the choice and information available to customers
 Anti-competitive practices
 Restrictive business conduct ( horizontal & vertical)
 Unfair trade practices ( misleading advert, tied-selling, false claims et al)
 Lack of awareness and understanding
 Lack of buy-in among policy makers
 Absence of public demand and support
6
CONSUMER RIGHTS & COMPETITION
Article 46 of the Bill of Rights of the Kenyan Constitution state that :
Consumers have the right-(a) to goods and services of reasonable quality;
(b) to the information necessary for them to gain full benefit from goods and
services;
(c) to the protection of their health, safety, and economic interests; and
(d) to compensation for loss or injury arising from defects in goods or services.
Competition ensures fair play in the market giving the consumer
more access, choice, quality and fair prices for the desired goods
Competition Authority charged with the mandate of implementing the
competition Act 2010.
BRIEF BACKGROUND
NUMBER OF REGISTERED MOBILE MONEY
ACCOUNTS IN KENYA (IN MILLIONS)
Series 1
25.3
26.3
21.1
19.2
16.4
8.9
5.3
1.3
2007
2008
2009
2010
2011
2012
2013
2014
MOBILE MONEY AGENTS
Mobile money transfer Agents by service provider as
at Jun 2014
In 2008 , there were 6,104 mobile
money agents across the country
Safaricom
80,230
 As at June 2014 , there were a total
of 116,196 mobile money agents;
Airtel
10,990
Orange
9,231
Mobicash
7,765
Tangaza
1596
Yu
1072
 Safaricom opens up its mobile agent
network after complaints by Airtel Kenya
amongst other players in 2014.
DIGITAL FINANCE REGULATORY ENVIRONMENT
In 2009 Finance Act
2009 allows for
changes of banking
act to include agent
banking;
In 2011, national
payment systems
act passed
In 2012, antimoney laundering
regulations issued;
In 2014, national
payment service
commenced date
announced; national
payment service
regulations issued;
CONSUMER EXPERIENCE
PROGRESS MADE IN PROTECTING CONSUMERS
Consumers required to register their SIM cards to reduce
fraud
SIM cards that allow for customers to get contacts directly
from the phone developed to reduce customers loosing
money
Safaricom example of showing the name of the person the
transfer is to be made out to before sending, reducing
customer complaints on lost money during transactions
CURRENT CHALLENGES
Current areas of concern
Costs being passed on to the consumer –
 Eg. In 2013 when the 10 percent excise duty on fees charged was introduced,
Safaricom also introduced new customer chargers on their transactions
Consumer Right to Access and choice of mobile money services through mobile
money agents
There has been issues of access to other mobile money agents because of some
anti-competitive practices Safaricom was engaged in
Exclusive dealing with their mobile money agents. This is prohibited by the
competition act 2010 section 21(1)
In 2014 , reports showed that Safaricom finally opened up their mobile agent
network
Succession of Digital finance assets by consumers next of kin
CHALLENGES…..
 Coordination amongst the various authorities on consumer protection and
competition on the areas of convergence in digital finance
Low levels of understanding amongst stakeholders on consumer protection and the
benefits of competition to demand for competition in the digital finance market
RECOMMENDATIONS
Research on the level of competition in the digital finance market and put
appropriate measures to ensure that consumers continue to benefit from the
product
Advocate for competition in the market
More collaborative efforts between the sectoral regulators and the consumer
protection agencies and Competition agencies in Kenya
Increase consumer awareness campaigns on their rights in the mobile money
market.
THANK YOU