Safaricom sued by Faulu Kenya over M-Shwari

Barely one month after launching its M-Shwari service, Safaricom has been taken to court by microfinance company Faulu Kenya for allegedly breaching a non-disclosure agreement they had reached and purporting that the new service is its idea and product.

In the case filed as urgent at the Kenya High Court, Faulu Kenya claimed in an affidavit that they were the principal creators of the M-Shwari idea back in 2011.

Faulu Kenya said that the idea was to operate the cash advance service on the mobile telephone platform, allowing clients to apply for and receive loans on mobile and make payment via the platform.

Faulu Kenya claims that it proposed a partnership with Safaricom, only for Safaricom to go ahead and launch a similar service, dubbed M-Shwari, to its customers in partnership with the Commercial Bank of Africa (CBA).

The company believes Safaricom violated a non-disclosure agreement over the idea.

“Safaricom would use that information only for the purpose of facilitating research on its M-Pesa service and not to disclose the same unless Faulu expressly authorises them to do so,” Faulu’s Head of Legal, Ann Makor, toldThe Standard.

“The agreement was also that Safaricom would not use the information to compete and obtain advantage in respect to the disclosing party,” Makor added.

For this reason, Faulu Kenya wanted the court to issue a temporary injunction stopping Safaricom from offering the service. This was, however, not granted by Justice John Havelock, who said that he has to hear Safaricom’s side of the story first.

“Unless restrained by the court, Faulu will continue to suffer irreparable loss and damage,” Makor said. She added that Faulu had already launched the service in partnership with Airtel Kenya, operating under the brand name Kopa Chapaa, and that the service had already been approved by the Central Bank of Kenya (CBK).

Justice Havelock set December 18 as the hearing date for the case.

Posted in: FeaturedTelecoms

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