Science & Technology
Contemporary (2000–present)
East Africa, Kenya
M-Pesa interoperability — CBK directives 2024–2026
<p>M-Pesa's dominance of Kenyan retail payments — over 60 million registered users, agent network of around 200,000 outlets, transaction volume that exceeds Kenyan GDP annually in money-flow terms — has been the structural condition of Kenyan fintech for nearly two decades. The Central Bank of Kenya (CBK) under Governor Patrick Njoroge through 2023 and Governor Kamau Thugge from June 2023 has spent the last several years trying to use regulatory authority to compel interoperability between M-Pesa, Airtel Money, and the bank-led PesaLink switch.</p>
<p>The interoperability sequence is worth tracing. The CBK National Payments Strategy 2022–2025 set out the policy framework. The 2022 directive on person-to-person interoperability across mobile money operators worked for small transactions but had operational friction (long-string codes, delayed settlement) that limited uptake. The 2023 directive on merchant-payment interoperability (Pay Bill / Buy Goods across operators) produced more uneven implementation. The 2024 directive tied to the broader PesaLink modernization required real-time gross settlement between mobile money operators and commercial banks for transactions above KES 70,000.</p>
<p>Susan Lukandu at the Centre for International Private Enterprise, and Olusola Olokuntoye on the FSD Africa research side, have written on the interoperability economics. The point that recurs: Safaricom's M-Pesa generates roughly KES 110 billion annually in mobile-money revenue (FY 2024 reporting), which represents around 40% of Safaricom's total service revenue. Interoperability that erodes M-Pesa's network-effect lock-in is a direct revenue threat, and Safaricom has the political weight to slow implementation of interoperability rules through technical delaying tactics that the CBK has limited enforcement capacity to override.</p>
<p>The comparable West African case is the Nigerian Inter-Bank Settlement System (NIBSS) Instant Payment platform, which since 2011 has provided real-time interoperability across Nigerian banks and from 2019 across the Payment Service Banks. NIP processed over NGN 600 trillion in 2023. The CBK's interoperability vision for Kenya is broadly modeled on NIP, but Kenya's mobile-money structure — where the dominant operator is not a bank — has made implementation politically harder than Nigeria's bank-led equivalent.</p>
<p>The 2025–2026 directives have pushed further into QR-code interoperability (Hakikisha / KE-QR), into cross-border integration with Tanzania (TIPS) and Rwanda (RIPPS), and into the PAPSS regional settlement layer. The Pan-African Payment and Settlement System launched by AfCFTA in 2022 is the longer-term frame that the Kenyan domestic interoperability work is meant to slot into. Whether the regional layer becomes functional faster than the domestic interoperability gets fully implemented is, at the current pace, an open question.</p>
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