Cofek advisory on Equity Bank’s thin-sim technology, regulator and parliament role

Be Social. Share this Article

Battle of titans: Equity Bank CEO James Mwangi and Safaricom CEO Bob Collymore

Developments around the ongoing thin-sim technology debate currently at the centre of the fierce battle between Equity Bank and Safaricom cannot escape our comment.

From the outset, however, there is no contention about the huge benefits of a new competitor for Safaricom’s M-Pesa. There is also no contention about the need to allow for a free hand on ICT innovations, thin-sim technology included.

Three issues are, however, in our considered opinion contentious:

First, whether or not the Jamleck Kamau parliamentary committee was right to order for a stop on the thin-sim rollout; Second, whether or not the parliamentary committee encroached on the Communications Authority’s (CA) independence and third; as to whether or not the CA decision, process and pace of the same decision was fair to all stakeholders.

(a)   Whether or not the Jamleck Kamau parliamentary committee was right to order for a stop on the thin-sim rollout

Art. 95(1) (2) of the Constitution as read together with Art. 1(1)(2)(3a) gives the National Assembly an overarching oversight role on any public interest matter under primary purview of any institution, person or group of persons. This is especially so if the matter in question is constitutional in nature and more so if a threat or actual infringement on the Bill of rights is anticipated. In this case, privacy and consumer rights as articulated at Art.31 and Art. 46, respectively, are at stake.

It must also be noted that a Committee of Parliament represents and is a true reflection, has authority, privileges and powers of the entire Parliament. In this respect, therefore, Parliament was in order to intervene. The indecisiveness and the belated peculiar order from CA for indemnity from risks, to Equity Bank, on its own decision speaks volumes on whether or not it indeed believed in its’ decision in the first place.

But how should Parliament or its’ committee(s) intervene on such matters? It must have a sound basis and further derive such legitimacy from stakeholder participation and other national values as envisaged in Art.10 of the Constitution.

In our view, the move by Parliament was not done properly other than as a welcome but temporary cautionary measure. What needs to happen then?

Parliament must urgently form a team of stakeholders comprising of the ICT Ministry, regulator, independent ICT experts, operators and consumers to give recommendations to the Committee and on which basis they can form a firm opinion. Parliament must of essence be fair to Equity Bank and other interested players by dispensing of this matter within reasonable timeframe.

(b)    Whether the parliamentary committee encroached on the Communications Authority’s independence

On this, the answer is no. This is because Parliament has constitutional and other residual powers to oversight any state office and institution including Chapter 15 independent commissions, and which CA is not. In any case Art.

34(5) allows Parliament to enact a CA which is independent of control of government, political and commercial interests.

The Constitution cannot envisage a situation in which a body that Parliament creates will have imaginary independence against its’ own creator, Parliament. What can only be challenged, with evidence, is if the Jamleck Kamau Committee of Parliament in its’ recent decision, may have been equally advancing partisan political and or commercial interests. Further, it is debatable if CA is purportedly independent from Government and commercial interests. An attempt by certain quarters to lynch Parliament intervention is clearly a case of double standards at its best.

The Supreme Court is, Monday, set to rule among other issues on whether the CA is indeed that “independent” institution as envisaged under Art. 34(5) of the Constitution.

(c)    Whether or not the CA decision, process and pace of the same decision was fair to all stakeholders

The CA is clearly the cause of the current confusion around the thin-sim rollout on various reasons;

First, the CA and by its’ own admission, did not conduct its’ own independent study as practice on the suitability or otherwise of the thin-sim technology. There was nothing more compelling for the unprecedented rush for the regulator to make a decision on a basis it neither owns nor can competently defend.

Second, that CA in its unmatched sense of urgency attempted to take a risk in approving the thin-sim pilot, for a year, for one player and for a thin-sim from one manufacturer raises fundamental issues about the integrity of the said decision. While all innovations involve risks and pilots, the manner this particular one was suspect and devoid of public interest and in which case it was a calculated monopoly for the said operator and manufacturer. The regulator only type-approves and allows as many players – operators and manufacturers to take part.

Third, for the regulator to call for indemnity guarantee from Equity Bank for its decision only confirms the obvious – CA was clearly not ready to make the decision but was caving into either commercial, political and or other pressure which hasn’t been laid bare.

Fourth, the CA call for indemnity from risks needs to have a technical and legal basis. The form of guarantee being sought must comply with consumer rights as spelt in Art. 46 of the Constitution and the Consumer Protection Act, 2012.

The amount, process and time of compensating consumers who will be victims of the anticipated thin-sim technology risks must be gazetted. If not, the CA must be ready for an avalanche of claims from consumers should anything go wrong with the thin-sim rollout.

In the meantime, Cofek is actively considering to take legal action against the regulator for the unprofessional manner in the regulation of the thin-sim technology which does not present a fair balance between commercial and consumer interest.

Be Social. Share this Article