DIGITAL PAYMENT

Kenya key driver of global mobile money deals – report

Approximately one in five consumers in Kenya are purchasing products via mobile money.

In Summary

•The trend comes as the use of hard currency continues to be discouraged in the fight against the spread of Covid-19.

•A report by the Kenya National Bureau of Statistics shows mobile money transactions in the first six months of 2020 increased to Sh2.144 trillion from Sh2.136 trillion in 2019.

Customers queue outside an M-Pesa shop in Nairobi
Customers queue outside an M-Pesa shop in Nairobi
Image: FILE

Kenya is among key drivers of global mobile money transactions, a report by global firm-GSMA indicates, as the Covid-19 pandemic continues to push up digital payment trends.

The GSMA Consumer Survey 2020 shows approximately one in five consumers in Kenya and Mozambique purchase products such as food, clothes and other items via mobile money as a direct result of Covid-19, with hard-cash is being discouraged.

Mobile money has been significant in delivering vital financial support and providing safe, no-contact ways to pay for food, electricity and other life essentials during the Covid-19 pandemic, the report notes.

The 'State of the Industry Report' by GSMA indicates the number of registered accounts in 2020 grew by 12.7 per cent globally to 1.21 billion accounts – double the forecasted growth rate.

More than $2 billion (Sh219.6 billion) is being transacted per day with mobile money becoming a new part of the daily routine for millions around the world.

We see that mobile money is a powerful tool for expanding the financial inclusion of women in low- and middle-income countries
GSMA's Chief Regulatory Officer, John Giusti

Kenya National Bureau of Statistics (KNBS) data shows that mobile money transactions in the first six months of2020 increased to Sh2.144 trillion from Sh2.136 trillion recorded in the same period in 2019.

During the period, the Central Bank of Kenya (CBK) instituted several measures in the financial markets, among them removal of charges on mobile money transactions to cushion low-income consumers.

An additional 2.8 million people were added into the mobile money ecosystem last year, according to CBK data, with the monthly volume of person-to-person transactions increasing 87 per cent between February and October.

The pandemic was a catalyst for regulatory institutions to make decisions and implement measures in countries such as Kenya and Ghana, the report notes.

In 2020, mobile money-enabled merchant payments grew in all dimensions – volume, value and merchant activity, globally.

The value of mobile money merchant payments grew by 43 per cent, compared to 28 per cent in 2019.

This has resulted in over $2.3 billion (Sh252.5 billion) transacted per month on average in 2020.

Meanwhile, the number of merchant payments increased by 15 per cent in the same period.

“Over one in three providers in our survey stated that the Covid-19 pandemic had directly increased demand for merchant payments,” Akinwale Goodluck, head of Africa, GSMA, said.

This was reflected in a 29 per cent surge in the number of active merchants between December 2019 and June 2020.

Similarly, the average number of merchant payments performed by a unique customer account grew from 3.9 to 5.1 per month.

“In fact, according to the GSMA Consumer Survey 2020, approximately one in five consumers in Kenya and Mozambique stated that they had begun purchasing products (food, clothes, items, etc.) via mobile money as a direct result of Covid-19,” the report reads in part.

This year's report however found that across markets, women are still 33 per cent less likely than men to have a mobile money account.

The GSMA said with its members, it is committed to closing the gender gap by addressing the barriers that prevent women from accessing and using mobile financial services.

The GSM Association is an industry organisation that represents the interests of mobile network operators worldwide where more than 750 mobile operators are full members, and a further 400 companies in the broader mobile ecosystem are associate members.

Yesterday, GSMA's Chief Regulatory Officer, John Giusti, said: "We see that mobile money is a powerful tool for expanding the financial inclusion of women in low- and middle-income countries.”

Globally, digital payments were expected to reach an annual transaction value of $4.4 trillion (Sh483.1 trillion) in 2020, with a 17 per cent Compound annual growth rate (CAGR) through 2024.

Meanwhile for the first time, more than $1 billion (Sh109.8 billion) was sent and received in the form of remittances globally every month via mobile money, the report notes.

This was within a year that Kenyans living and working abroad defied the Covid-19 pandemic to send home more.

Diaspora remittances were recorded at a high of Sh28.6 billion ($260.2 million) in February.

Cumulatively, the remittances have now grown by 11.4 per cent across the last 12 months to Sh351.5 billion ($3.2 billion) from a lower Sh307.6 billion ($2.8 billion) in the preceding year.

“ Despite early fears that transactions would decline as people worldwide suffered job losses and income cuts during the pandemic, it remains clear that diasporas continue to support family and friends back home,” the report notes.

As a result, the total value of transactions increased by 65 per cent to an annual total of $12.7 billion (Sh1.39 trillion) in 2020.

In Kenya, leading telco Safaricom's M-Pesa platform now accounts for 33.6 per cent of the firm’s earnings, second after voice calls which contributed 34.5 per cent of Safaricom’s service revenue last year.

M-Pesa revenue grew by 12.6 per cent to Sh84.44 billion while voice service (incoming and outgoing) revenue dropped 1.4 per cent to Sh94.45 billion in the financial year ended March 31, 2020.