Kenya’s mobile money use swells amid Treasury warning

Kenyans transacted some 8.5 billion U.S. dollars on mobile money in the third quarter, up from 7.3 billion dollars in a similar period last year as usage hit a new high, data from the Central Bank showed Wednesday.

The surge in use, however, comes as the Treasury cautioned that the entrenched use of mobile money in the country posed fiscal risks to the economy if the service collapses.

Between January and September, Kenyan citizens moved 22 billion dollars, an indication that usage of the service will surpass last year’s transactions that stood at 26 billion dollars.

The number of subscribers stood at 33.4 million in September, up from 32.3 million in July and 29 million in January, the apex bank data showed.

Mobile money agents stood at 173,731 at the end of the quarter, surging from 146,710 in January and highlighting how critical the sector is in creating jobs.

Kenya has several mobile money service providers. M-Pesa, operated by Safaricom, is the dominant player, transacting over 92 percent of all the cash moved on mobile money.

The huge volumes of cash moved on the platforms have made the Treasury to flag down mobile money as a risk to the economy.

According to the Treasury, information technology accounted for about 0.9 percent of the gross domestic product (GDP) in 2015 driven by financial innovation in mobile money transfer services.

Various financial products have been leveraged on the payment channel, increasing the inter-linkages between the technology and the banking sector.

“If this system was to be compromised, the impact would be substantial considering the linkages and the corporate tax revenue for government,” said the Treasury in its newly-released budget policy statement.

“Were this risk to materialise, the impact on government including loss of deposits, loss of potential revenue and market confidence would put pressure on the government to compensate the losses,” it said.

“Technological innovation via the mobile money transfer services and its pivotal role in the economy should therefore be given due consideration as a plausible fiscal risk,” the Treasury said.

SOURCE:COASTWEEK