Mobile Banking Services in the East African Community (EAC): Challenges to the Existing Legislative and Regulatory Frameworks in the EAC

In the East African Community (EAC), mobile banking is growing at a remarkable speed and it is bound to further grow in a significant way in the near future. The field of mobile-payments and mobile-banking is not only new and fast evolving in the EAC but also sits at the overlap of several regulatory and legislative domains — those of banking and telecommunication. The overlap substantially raises the risk of coordination failure, where legislation or regulatory approaches are inconsistent or contradictory. This is creating considerable uncertainty about the appropriate regulatory response that must be established and also what supervisory regime applies to the various activities involving banks and non-banks. A comprehensive vision for market development between policy makers, regulators and industry players in the EAC can help to define the obstacles and calibrate proportionate responses to risk at appropriate times. This paper therefore addresses regulatory and legislative issues affecting mobile money in the EAC, where cell phones transfer more than half a billion dollars monthly. The number of mobile phone users has long exceeded the number of people with bank accounts across the EAC. The purpose is therefore to demonstrate the need for the EAC to address issues relating to telecommunications and financial regulation to ensure that mobile money services bring the desired broad benefits, especially to the poor in the EAC.