Regulators are worried that M-Pesa's success could disrupt the economy

When mobile money service M-Pesa launched in 2007, consumers and industry players in Kenya couldn't have thought it would become so ubiquitous and entrenched in the lives of millions of Kenyans like it is today.

Because mobile money has grown to become such a phenomenon, Kenyan treasury officials, while acknowledging its important role in the economy, think the service should be regarded as a "plausible fiscal risk" to the East African country.

The officials think this, according to a QZ report, because of mobile money's growing inter-linkages with different sectors of the economy.

No less than 25 million Kenyan's use M-Pesa and, in 2015 alone, they transacted $28 billion. This is equivalent to about 44% of Kenya's GDP which stands at $63.4 billion.

In 2016, the Safaricom-owned mobile money service had transacted $25 billion within the first three-quarters on the year. Globally, it is the mobile money leader as far as regular users and transactions are concerned.

All these metrics make it easy to understand the Kenyan government's apprehension. In a recently released budget report, it said, “The financial and other institutions linked to this system would be susceptible possibly amounting to the value transacted through the channel, were this risk to materialise.”

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Potential consequences such as loss of deposits, loss of potential state revenue and damage to market confidence would make for a very big headache for the government who will have to compensate consumers for such losses.

For Safaricom, it doesn't want to slow down the growth of M-Pesa. “We continuously work with the Central Bank of Kenya and other regulators to test and review the systems put in place and to ensure they are of the highest global standards,” says Steve Chege, Corporate Affairs Director at Safaricom.

Mobile money operators in Kenya have probably anticipated the government fear and have further implemented policies to manage operational risk, safeguard users' funds, and plan for business continuity, according to the QZ report.

“As someone who integrates with M-Pesa, the bank systems as well as with Visa and MasterCard, my general feeling is that M-Pesa is extremely reliable,” says Agosta Liko, CEO at PesaPal, an online and mobile payments aggregator.

There is no definite direction as regards the governments fear that an M-Pesa hack or compromise could hurt the entire Kenyan economy. Pulse Tech will keep you updated.