Telecoms want more fairness in licensing

Telecom operators want the National Payment Systems Bill, 2019 to provide leniency in insolvency proceedings where the Central Bank may revoke or suspend a licence of a company in financial stress.

According to the Acting Chief Legal Counsel at Uganda Telecom (UTL) Prossy Kembabazi, revocation of a licence should be limited to a company that goes into liquidation.

“Before revoking a licence, the Central Bank should notify the operator stating reasons for intended revocation and invite the operator to show cause why the licence or approval should not be revoked within 14 days,” Kembabazi said.

The proposal was re-echoed by Airtel Uganda’s Legal and Regulatory Director, Dennis Abigaba Kakonge who said that with fair hearing, the licensee would have an opportunity to appeal the Central Bank’s determination before revocation or corrective action.

These proposals were raised by management of telecom companies who were appearing before the Finance Committee to present their views on the Bill that is before Parliament.

Kakonge cited Clause 24 of the proposed bill that stipulates the operation of payment systems by Bank of Uganda which he said presented a conflict of interest.

“If the Central Bank shall double as a payment systems provider, then it cannot regulate itself. Modifications should be made to minimize the potential conflict of interest,” said Kakonge.

MTN Uganda Chief Executive Officer, Wim Vanhelleputte said the mobile money option had improved access to financial services in rural areas where traditional bank penetrations was limited.

He added that additional protection for mobile money in the bill was necessary, as it would afford similar protection to users who deposit and keep money there.

“We propose to include the mobile money escrow protection under the Deposit Protection Fund where each mobile money account shall be treated as a single account in case of insolvency or closing of financial institutions which hold the trust,” said Vanhelleputte.

He also called for the Bill to consider tax parity with other equivalent cash-out/withdrawal channels like agency banking.

MPs however, raised concerns over the request by the telecom operators to use interest earned from trust accounts to fund financial literacy, innovation and product development.

“These companies have their own strategic business plans and budgets which they use for innovation and financial literacy. Why do they want to share what is not theirs?” Hon. Jane Pacuto, the Deputy Chairperson of the Committee asked.

Ngora County MP, Hon. David Abala said the burden of executing the said tasks of the telecom companies would end up being borne by Ugandans, which he added would be a disservice to many mobile users.

Committee Chairperson, Hon. Henry Musasizi commended the telecom operators for facilitating financial literacy in rural areas which he said has improved the welfare of citizens in such areas.

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