Pandemic drives Kenya’s mobile money usage

By Steve Umidha

A growing number of Kenyans continue to use mobile money as a fitting means for their daily transactions, a new report has shown.

The survey by GSMA, an association that represents interests of over 750 mobile network operators globally, in its State of the Industry Report on Mobile Money 2021, notes that during the pandemic, demand for mobile money increased among businesses, governments and new services that previously relied on cash or other payment channels.

“One of the outcomes of the pandemic is that it has prompted mobile money providers to forge stronger, more trusted bonds between customers and other stakeholders in the payments ecosystem,” it reads in part.

Released yesterday, the report also indicated that the industry was having a profound and lasting impact with mobile money users now than ever before becoming more financially included and moving away from the margins of the financial system.

“This strong and steady growth suggests that customers are using mobile money in more advanced ways and in all aspects of daily life. This marks a change from the early days of mobile money when the main use cases were bill payments and P2P payments in the form of occasional domestic remittances,” said Akinwale Goodluck, GSMA head of Sub-Saharan Africa.

As of January 2021 for instance, Kenya had some 66.6 million registered mobile money accounts, a figure that has been steadily growing. In one year, there was a growth of 12.5 percent, as there were 59.2 million accounts in January 2020, according to statistics by Communications Authority (CA).

Kenyans transacted a record 450.9 billion shillings on mobile phone in July last year, with the usage boosted by increased uptake of the service due to the COVID-19 pandemic.

The Central Bank of Kenya (CBK) data shows that usage rose from 3.6 billion dollars in June to 4.18 billion dollars in July, the biggest jump ever seen in the sector – attributed to a government measure instituted to curb COVID-19 spread by encouraging the use of mobile money payments.

This saw mobile money service providers remove charges on transactions that are less than USD 9.3 dollars to cushion low-income consumers.

Similarly, transaction fees on payment of bills and transferring cash to bank accounts were also eliminated to discourage the use of banknotes, giving a huge boost to mobile money transactions amid the pandemic.

But on Monday Kenya’s banking regulator announced the expiry of emergency measures on the restructuring of loans. The move will see borrowers in the country regularize their repayment procedures.

In a statement, CBK said borrowers whose loans were performing before March 2, 2020, but were restructured and subsequently went into arrears, will have three months – up to June 3, 2021, to regularize their loans.

This is therefore an extension from the original expiry date, which was March 3, 2021.

Restructuring of loans was among the emergency measures that the CBK announced on March 18 and 24 2020, to mitigate the adverse economic effects on bank borrowers from the coronavirus pandemic.

Banks were directed to restructure loans for a period of up to one year of the loans that were performing as at March 2, 2020.

Globally, the report further shows that total transaction values grew by 22 per cent in 2020 to reach $767 billion. This means that, for the first time, the industry is processing over $2 billion a day and has more than doubled in value since 2017. GSMA expects this value to exceed $3 billion a day by the end of 2022.