The value of money handled by mobile money agents dropped for the fourth month in a row in April on the back of lower spending due to ongoing economic uncertainty.
Central Bank of Kenya (CBK) said that agent transactions dropped by 6.6 per cent or Sh35.5 billion to Sh502.22 billion last month from Sh537.75 billion in March.
The value has fallen every month between January and April, from the record high of Sh605.69 billion recorded in December 2020.
Analyst have tied the decline in April to the fall in spending by businesses and consumers due to the tougher Covid-19 prevention restrictions that included the zoning off of five counties that had recorded the highest infection rate.
Among the five - Nairobi, Nakuru and Kiambu- account for the highest contribution to GDP, with the others being Machakos and Kajiado. Curfew hours were also extended reducing operating time.
“Due to the containment measures in April, some people were partly laid off and the amount of spending reduced. Those who received money did not want to spend much as well,” said Ken Gichinga, chief economist at Mentoria Economics.
The restrictions, combined with the fear to spend, led to lower cash circulation in the economy, continuing a trend that was also seen in March.
CBK data showed that the amount of cash circulating in people’s pockets and big businesses declined by Sh5.56 billion to Sh225.81 billion in March.
The decline in mobile transaction volumes since January is also partly a result of reinstatement of mobile transfer charges that had been waived last year to discourage the use of hard cash that was feared to help spread the virus.
Kenyans had been taking advantage of the waiver of charges for cash transfers of up to Sh1,000, a waiver of charges for transfers between mobile wallets and bank accounts, and an increase of the daily limit for mobile money transactions to Sh300,000.
The transaction fee waiver expired in December, although the daily transaction limit remained unchanged and banks are still not allowed to charge for transfers between accounts and mobile wallets.
SOURCE: BUSINESSDAILY / ELIZABETH KIVUVA