This archive report was first published on 26 July 2021.
On May 27, 2021, High Court Judge James Makau issued a temporary injunction to restrain the Central Bank of Kenya (CBK) from considering a plan to migrate all banks to a foreign-owned Society for Worldwide Interbank Financial Telecommunications (SWIFT) connectivity platform.
The move was aimed at having banks connect directly to the SWIFT platform, rather than going through a third-party service provider like Kenya Commerce Exchange Bureau Ltd.
Kenya Commerce Exchange Bureau Ltd, a city-based ICT company, had petitioned the court, arguing that the move would drive it out of the business of offering SWIFT services to local financial institutions.
The company, which has been providing SWIFT services in Kenya since 2002, noted that it offers services for 27 banks, contributing to 23 per cent of its business.
According to the company, by calling a meeting without involving it, CBK was going to condemn them unheard, a situation that would lead to them losing a lot of business and even laying off some of its workers.
CBK argued that it was simply carrying on its role of regulating and supervising an efficient and effective payment, clearing and settlement system, noting that third parties providing connectivity to SWIFT to institutions lack effective business continuity planning as they are not regulated.
However, the firm noted that CBK failed to back up its claims that the use of third-party SWIFT was prone to disruptions.
Kenya Commerce Exchange Bureau Ltd argued that by using its platform, the country has been saving on foreign exchange, with the outflow in terms of foreign exchange being the equivalent of Sh63 million as against virtually nothing at present.
CBK had directed the banks to connect directly to the SWIFT platform, stating that they had been engaging the SWIFT to negotiate the costs on behalf of financial institutions in Kenya.
However, the firm argued that CBK overstepped its mandate by vouching for a service provider when it should only be a referee.
The court injunction was issued on May 27, 2021, and is set to be determined in the case.
