Mobile money exceeds industry expectations as Kenya, Nigeria reap

•Strong inflows come on the back of continued sacrifices by Kenyans living in the diaspora as reflected in a  study by WorldRemit. 

•The GSMA’s State of the Industry Report on Mobile Money 2023 shows adoption rates are even more significant than expected, with registered accounts, transaction values and deployments exceeding industry predictions. 

Mobile money services are growing faster than predicted around the globe, the GSMA’s annual ‘State of the Industry Report on Mobile Money 2023’ indicates, propping international remittances.

This, as countries such as Kenya and Nigeria continue to record strong inflows which are expected to strengthen in the second quarter of this year, on easing inflation in the US which softened to its lowest level in almost two years last month.

In 2022, daily transactions via mobile money, globally, reached $3.45 billion, exceeding the $3 billion amount predicted in 2021.

Total transaction value for mobile money grew by 22 per cent between 2021 and 2022, from $1 trillion to around $1.26 trillion (Sh169 trillion ).

The industry report shows that during 2022, global mobile money-enabled international remittances grew by 28 per cent year-on-year to $22 billion (Sh2.9 trillion).

“During the pandemic, many diasporas sent more funds via mobile money to friends and family than ever before. As a result, international remittances grew significantly as many senders favoured mobile money for its efficiency, speed, safety and cost-effectiveness,” the report reads in part.

In Kenya, cumulative inflows for the 12 months to March 2023 totaled $4billion (Sh536.5 billion), Central Bank of Kenya (CBK) latest data shows, compared to $3.9 billion (Sh 523.1 billion) in a similar period in 2022.

Remittance inflows in March totalled $357 million (Sh47.9 billion) up from $309.2 million (Sh41.4 billion) in February.

“The remittance inflows continue to support the current account and the foreign exchange market. The US remains the largest source of remittances into Kenya, accounting for 58 per cent,” CBK says in its weekly bulletin.

While inflation in the key source of US eased, the strong inflows come on the back of continued sacrifices by Kenyans living in the diaspora as reflected in a market study by international money transfer service firm–WorldRemit. 

According to the firm, more than half (54 per cent) of remittance senders have taken up a side hustle since the Covid-19 pandemic struck, with almost one-fifth doing so to be able to continue supporting families and friends back home.

The trend is expected to continue this year, as individuals search for secondary sources of income to supplement existing channels.

Dubbed the ‘Cost of Living Index’, WorldRemit sought to understand how the high inflation has affected the lives of international money senders around the world. 

The survey found that 82 per cent of remittance senders, including Kenyan migrants who are key remittance senders in the US, Australia, and UK markets, agreed that the cost of living for the people to who they send money to has risen since the start of the year. 

With several factors contributing to increased financial pressure, new data shows that 72 per cent of respondents in the US, 41 per cent in Australia, and 44 per cent in the UK have taken up a side hustle

At least 27 per cent of respondents on average across our three markets indicated they did so to support the increase in their own cost of living. 

Of the respondents who cited having a side hustle, 89 per cent reported that they would maintain their side hustles in the next 12 months.

An earlier study by the firm had indicated Kenya’s abroad have had to cut on their spending to afford sending money back home.

The study conducted in June showed 49 per cent of respondents reported that they eat out less, 46 per cent save on day-to-day expenses, while 28 per cent have limited social gatherings to save money.

About 25 per cent of the respondents said they had opted for public transportation rather than driving to save, part of which has seen them continue to support families and friends back at home.

“Migrants’ resilience and commitment to their loved ones back home has proven to be vital, especially in a period where household expenses are increasing around the world,” Jorge Godinez Reyes, Head of the Americas, WorldRemit, had noted.

Education, healthcare and household needs continue to remain the main uses of remittances in Kenya, an analysis by WorldRemit indicates.

The high cost of education is expected to further push the cost of living for most families in Kenya.

According to WorldRemit, families paid more than 1.75 times their monthly earnings on school supplies during the recent back to school period.

Families in Morocco, Cameroon, Ghana, Guatemala and Kenya are all projected to spend more than the average monthly income on education.

Meanwhile, World Bank projects remittances to Sub-Saharan Africa,the region most highly exposed to the effects of the global crisis, will grow by 3.9 per cent in 2023, albeit a softer growth compared to 5.2 per cent last year, when total inflows were estimated at $53 billion (Sh 7.1 trillion).

The report by GSMA, funded by the Bill and Melinda Gates Foundation, demonstrates that rates of adoption of mobile money services are even quicker than expected.

Kenya’s Communication Authority notes the uptake of mobile money services remained steady in Quarter 2 of 2022-2023, recording 38.6 million subscriptions up from 37.4 million recorded during the previous quarter, representing a penetration rate of 78.2 percent.

Mobile money continues to drive financial inclusion for the world’s unbanked, particularly amongst women in rural communities, where access to mobile money can play a transformational and empowering role.