"what mechanisms are in place to secure the safety of mama mboga's funds in case safaricom goes belly up?"

Selah you have not answered that question.

CBK is not the law. The law is the law. Is there a law not a license that is being broken or followed or not?

Dismissing this lady may not be very wise especially with the new judiciary out there.

I wouldn't mind being schooled on this but dismissing her is not the way to go.

The reality is CBK is quite hapless on supervision and in understanding the spirit of its mandate. As we blog banks continue to fleece borrowers in the guise of a CBR rate that has since come down but banks defiantly continue to ensure they get their targets and bonuses by continuing to levy the same rates they levied in January this year.

The truth of the matter is that MPESA is a crude money transfer mechanism in its current state that would struggle to pass through any decent regulator's threshold for a money transfer service. However what is important is the nobility of MPESA. It has a big social impact that even the money safcom makes from it. This I believe is the problem. CBK is behaving populist by applauding the nobility alongside the rest of us without realizing that should something go wrong we will blame CBK squarely.

The risks of MPESA is that
1. It's not backed by any capital. Safcom have simply taken deposits and passed on the risks of the deposits to CBA. I doubt CBA's capital is sufficient enough to cover it's deposits and those of Safcom. However Safcom fungas macho CBK but banking the net banked positions from dealers which is a palty sum compared to sums sitting with agents at any one time. Most of the sums are sitting with MPESA agents in their accounts although these banks don't sit with the risk.
2. The deposits from advantage form a critical mass that should compel CBK to order safcom to have these deposits sitting in an escrow account or with a fund manager for the owners to earn a decent return. I am certain Safcom is probably sitting with more than $100m from advantage clients which it has used to finance it's capex.
3. The okoa jahazi is sham and is illegal. They call it advance but they collect the interest upfront. This is 'shylocking' which is I believe illegal. Again a CBK incompetence. Imagine okoaing jahazi at 50bob in the morning and paying in the evening. This works out to at least 10% for the day, 3,650% for the month and 19,000,000% effective annual rate. Consider more clients okoa jahazi in a day than entire populations of some tier 1 banks. Well no bank earns close to this and again CBK lost in the nobility! Even suppliers don't charge such sums for extended credit.

Kausha,your figures on the rates for okoa jahazi are mind boggling.Even shylocks in wazua don't charge that much and is safaricom really licensed as a lending institution?

I have a few questions....whats the need of backing the money with capital yet its not a saving instrument rather a mechanism to pass money from one person/institution to the other? 70% of the money deposited leaves the account almost immediately and 88% leaves the account on the same day. What MPESA does is what POSTA, AKAMBA and other bus services used to do..charge to transport money from one end to the other but on a wider scale.

On okoa jahazi....I thot safcom sell you a product called "airtime" but since ur taking it on credit, your charged 5/- to cover the risk...The probability of not paying back the airtime is very high and isnt the 10% charge worth it? Just like Mama mboga would charge u a shilling extra when u take her tomatoes on credit, to me thats just smart business.