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{
    "id": 1484958,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1484958/?format=api",
    "text_counter": 220,
    "type": "speech",
    "speaker_name": "Suba South, ODM",
    "speaker_title": "Hon. Caroli Omondi",
    "speaker": null,
    "content": "Anyone who may have studied the telecom sector in Kenya realises that over the years, we have had three service providers. That number has since reduced to two. Of the two, one is dominant. In other words, one has taken much of the space to the exclusion of the others. We like saying that it is because of better business practises, hard work and all those kinds of things. However, there are other nuances which affect competition and help promote dominance – which is not very good for the consumer. Hon. Temporary Speaker, let me break down a few things so that we may understand why I support this Bill. First, as a principle of regulation, when tariffs are set up for a utility service, there is something called ‘rate base.’ A collection of the entire asset base of that company is used to calculate the projected investment returns to arrive at the particular utility rate. In other words, if you have a rate base that is not transparent and specific to the particular utility service that you are offering, you will be misleading the consumers. If Safaricom's rate base for purposes of tariff setting include its operations on money lending activities, which is not the core business of a telecoms company, the rates that it will be charging will be higher than what it should have charged consumers if the rate base was limited to its telecommunications service. It is not a problem that a telecoms company can help or facilitate transfer of money using a mobile phone. The problem is when you start lending for an interest or when you start engaging in another activity that is not purely telecoms related. When you engage in additional businesses over and above the traditional telecoms business, you expand your rate base. Therefore, you will be required to bring in more assets and invest more than what would otherwise have been necessary for a purely telecoms company. Hon. Temporary Speaker, in the current mode of operation where telecoms firms are engaged in financial services, there is no transparency in terms of costs. That is why I agree with Hon. Elisha that non-core telecoms business should be separated from the core telecoms business. Such services should be separated from the core business that is being undertaken by Safaricom, for example, so that there can be clarity and transparency in their cost structure. Doing so would ultimately lead to a lower rate of charges for the consumer. The combination of M-Pesa as an integral part of Safaricom has, as a matter of fact, reduced competition in that sector. It is making it harder for new companies to enter the market. Before StarLink ventured into the Kenyan market, it was almost impossible to have fair competition in the telecoms sector. It was very difficult for customers to switch from one service provider to the other to enjoy quality service, since the only telecom firms that were providing those services were being held together in one particular space. Therefore, non-core telecom services must be separated from the core-telecom services so that there can be more competition and fairness in that sector. When a telecom firm deals with extra business aspects that are not necessarily telecom in nature – like lending money – it becomes difficult for the regulator to do his or her job properly. The authority that regulates interest rates is not the Communication Authority of Kenya (CAK). It is the Central Bank of Kenya. The telecom firms in this country are already lending money and charging interest, thereby fleecing poor Kenyans. Safaricom talks of financial inclusion, but it is actually creating financial exclusion. The interest rates that are being charged on poor people who borrow from Fuliza, which are compounded, are much higher than what many of us who access proper financial services from banks do pay. The interest rates are not user-friendly but rather very expensive. It is like supplying water in 20- litre containers to households in places like Kibra. Consumers of such water actually pay much more than those who get piped water from Nairobi Water Company in Muthaiga and other upmarket neighbourhoods. It is the same thing with Safaricom offering Fuliza loans to vulnerable Kenyans. Those who cannot access alternative financial services have been entrapped in debt. They are suffering a lot from psychological problems because of user- interest rates. It is important that we have that financial element of their business that is The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}