BD Insider: The SEC’s smart approach to fintech regulation

Jesutofunmi Adedoyin -

In today’s midweek update, we look at:

  • Kenyan lawmakers push for Safaricom, M-PESA split
  • NCC withdraws sanction threat against Starlink
  • SEC advocates for smart regulation in Nigeria’s fintech sector

Kenyan lawmakers push for Safaricom, M-PESA split

Kenyan lawmakers appear to be adopting a "divide and conquer" approach, as they push to separate Safaricom, the country’s largest telecommunications company, from its mobile money arm, M-PESA.

Why? This move is aimed at reducing Safaricom's market dominance and increasing regulatory oversight. The Information and Communications (Amendment) Bill of 2022, which proposes the split, has been revived in the Kenyan parliament. While Safaricom has consistently opposed the separation, regulators and lawmakers believe it is necessary to ensure fair competition and protect consumers.

M-PESA is a highly successful mobile money platform in Kenya, with over 31 million active users and billions of dollars in transactions processed annually. Separating it from Safaricom would create two distinct entities, each subject to its own regulations.

Safaricom has however argued that splitting M-PESA would not add value to shareholders and could result in a significant tax liability. The company has also proposed an alternative structure, creating a Holdco with divisions for its various business lines.

The Central Bank of Kenya supports the separation, believing it would enhance oversight of M-PESA transactions. However, Safaricom maintains that its integrated structure provides strategic advantages.

The outcome of this proposed split could have significant implications for Kenya's telecommunication sector.

Yesterday morning, the Nigerian Communications Commission (NCC) announced plans to sanction Starlink for raising its subscription prices in the country without prior regulatory approval. 

However, just hours later, the NCC retracted the statement, explaining that it had been issued in error.

Starlink sparked controversy last week when it doubled the cost of its residential plan from ₦38,000 ($24) to ₦75,000 ($48) per month, citing “excessive inflation” as the reason for the price hike.

Context: The move drew criticism from Nigerian telecom stakeholders, who accused the NCC of double standards. They argued that, while Starlink was permitted to raise its prices, local telecom operators have been blocked from increasing tariffs for the past two years. 

In August, the NCC even directed all telecom providers to give subscribers detailed information about their tariff plans. 

SEC advocates for smart regulation in Nigeria’s fintech sector

The Securities and Exchange Commission (SEC) is ramping up efforts to regulate Nigeria’s fintech sector without stifling innovation through its smart regulation initiative.

At the Nigerian Fintech Week event yesterday, the SEC's Director General stressed the importance of a well-regulated fintech ecosystem that fosters growth and innovation rather than disrupts it. 

To achieve this, the SEC is promoting a smart regulation approach, which tailors existing capital market laws to meet the specific needs of fintech operators. The regulator has already introduced FinPort, a dedicated portal designed to help both emerging and established fintech companies understand and comply with the relevant regulations in the capital market. 

Expanding on this, the Director General explained, "For smart regulation you’re considering the peculiarities of those products and introducing regulations that will adapt to them. Because it’s not all one hat that fits all.”

With this push for smarter, adaptive regulation, the SEC aims to strike a balance between safeguarding the market and supporting innovation.

By the Numbers

20%

Deep tech has a 20% share of global venture capital funding, up from about 10% a decade ago, according to a report from Boston Consulting Group.