Kenyans moved Sh5.21 trillion through their phones last year, an equivalent of half of the country’s estimated GDP, spurred by relief measures on mobile phone payments to help to curb the spread of the coronavirus.
Fresh data by the Central Bank of Kenya (CBK) shows the total transactions rose by 20 percent from Sh4.34 trillion the previous year.
This means that an average of Sh14.27 billion was transacted on mobile phones daily between January and December 2020 — some Sh2.81 billion higher than the Sh11.91 billion daily average in 2019.
Mobile money agents of Safaricom’s M-Pesa, Airtel Money and Telkom’s TKash handled Sh3.98 trillion in 2018— underling the astronomical growth in the value of transactions over three years.
“A significant increase of mobile money usage has been noted over the period the measures have been in place, demonstrating that they were timely and effective,” the CBK said at its Monetary Policy Committee meeting in December.
“For instance, the monthly volume of person-to-person transactions increased by 87 per cent between February and October 2020.”
The government introduced several measures, including doubling of the daily transaction limits to Sh300,000 and the removal of charges on small transactions below Sh1,000, to discourage the use of hard cash and help contain the spread of Covid-19.
Under the initiative by the CBK, other financial payments services companies and commercial banks also removed charges for customers who move money between their mobile wallets and bank accounts.
Data shows that the amount of cash handled by the agents from March to December when the measures were in force was Sh4.49 trillion, more than the Sh4.34 trillion handled in the full year of 2019, highlighting the significance of the CBK directives.
The cash handled by the agents maintained a steady month on month rise from Sh357.37 billion in May to hit Sh605.69 billion in December— a record high for a month since Kenya started tracking mobile money transactions.
The gradual re-opening of the economy from July saw the cash handled by the mobile money agents cross the Sh400 billion mark in a month for the first time on the back of a rising demand for goods and services as sectors started the gradual return to normalcy.
The CBK ended the free transactions last December, a reprieve for telcos that had since March lost billions of shillings in user charges.
The measures were set to last for three months to June last year but the CBK extended them to December amid protests from the telcos.
Safaricom said that it lost Sh9 billion between January and June last year due to the free M-Pesa transfers, contributing to its posting a six per cent drop in net profit to Sh33.07 billion — the first in nine years.
M-Pesa last month lowered the charges from Sh15 to Sh12 in a move aimed at maintaining customer numbers that had grown due to the free transactions.
Safaricom controls 98.8 per cent of customers, according to the Communications Authority of Kenya (CA), while Airtel Money and other service providers hold 1.2 per cent market share.
Mobile money agents handled Sh450.98 billion in July last year, a 14 per cent rise from Sh392.17 billion the previous month after easing of the restrictions, including resumption of domestic and foreign flights, allowing hotels to re-open and lifting the travel ban into and out of Nairobi and Mombasa.
The CBK is pushing for a seamless transfer of funds between Safaricom and Airtel, including the Lipa na M-Pesa payment service, in a move meant to lowers costs of transactions, enhance competition and maintain the rise in use of mobile platforms.
The banking regulator says that the interoperability in mobile transactions introduced in 2018 for sending money between Airtel and M-Pesa clients have not gone far enough to enable seamless transactions since it did not include merchants and agents.
In the formative years, mobile money platforms were primarily used for person-to-person cash transfers but are now used by businesses for payment of goods and services, a shift that has boosted their share in the national economy.