The amount of cash sent by Kenyans on mobile platforms over the past five months to May fell by Sh36.77 billion compared to similar period last year, official data shows, a rare drop that reflects the financial hardship faced by households and businesses due to the Covid-19 pandemic.
Data from the Central Bank of Kenya (CBK) shows that Kenyans sent Sh1.752 trillion through their mobile wallets in the five months to May, down from Sh1.789 trillion in corresponding period last year-— painting the picture of economic struggles.
In March, the cash sent fell by Sh3.879 billion from Sh368.39 billion sent in similar period last year even as the CBK waived charges on mobile money transfers of up to Sh1, 000.
The fall continued into May as the money sent through the mobile platforms dropping by Sh6.88 billion to Sh357.37 billion from corresponding period last year.
CBK Governor Patrick Njoroge last month said that the impact of the State restrictions to curb the spread of the coronavirus disease such as night curfews and a ban of mass gatherings was severe in April.
“The indicators for the second quarter suggest that the impact of Covid-19 on the economy was most pronounced in April,” Dr Njoroge said.
The rare drop in mobile cash transactions — the first in the first months since 2008— comes at a time firms are shedding jobs, cutting salaries and adopting un-paid leaves in efforts to reduce spending, a move that has plunged most workers into turbulent times economically.
Cash sent through mobile platforms has been on the rise since 2008 but job losses, pay cuts and un-paid leaves due to the coronavirus pandemic hurt the trend even CBK waived fees on mobile money of up to Sh1,000 in March.
The drop in money deals came even the number of mobile money accounts remained on the rise to hit 60.24 million accounts as at end of May while mobile money matched the trend rising to 243, 118.
Safaricom through its popular M-Pesa platform remains the dominant player in the sector but is facing stiff competition from banks that are now ramping up their mobile banking and internet-based banking market shares.
The move that was last month extended to December 31, is meant to cut down physical handling of money as part of reducing the spread of the coronavirus disease.
Cash sent through the mobile platforms started falling in March when Kenya enforced bans on mass gatherings, enforced the dusk to dawn curfew that was later reviewed and social distancing first case of Covid-19 was confirmed in Kenya on March 12.
Kenya, which had by yesterday reported 7,886 positive cases of Covid-19 and 160 deaths suspended commercial flights in and out of the country, banned public gatherings and imposed a night curfew in directives that have since hurt businesses.
The economy continues to reel from the coronavirus pandemic even as several sectors like hotels gradually re-opened from May.
In March, activity in the private sector plunged lowest in since November 2017 as the global coronavirus pandemic hit consumer demand and forced businesses to shed jobs coinciding with the first month-month drop in value of cash sent from last year.
The Market Stanbic Bank Kenya Purchasing Managers’ Index (PMI) — which tracks business performance in the manufacturing and services sector — fell to 34.8 in April from 37.5 in March from 49.0 in February.
April’s number was the second-lowest in the survey’s history, highlighting the impact of the virus on business and the economy in the second month of the State-imposed restrictions to contain spread of the coronavirus disease.
The chomp which has restrained demand for goods and services has reflected in the country’s economic growth slowing down to 4.9 percent in the first quarter of this year from 5.5 percent last year, the slowest pace in eight years.
SOURCE: BUSINESSDAILY / JOHN MUTUA