600,000 Kenyans abandon mobile money services - economic survey
By Barack Oduor |
The drop represents a decrease of 1.55 per cent in Kenya's mobile money subscriptions.
An economic survey report released on Monday revealed that the number of mobile money subscribers in the country dropped by 600,000 last year.
The new findings contained in the National Economic Survey 2024 issued by the Kenya Bureau of Statistics indicate that the total number of users dropped from 38.6 million to 38 million in 2023, while cash transferred grew by 5.5 per cent to sh5.5 trillion.
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The drop represents a decrease of 1.55 per cent in Kenya's mobile money subscriptions, a move that signals a paradigm shift in consumer behaviour trends in mobile money services in the country.
"Mobile money transferred between subscribers, however, increased by 19.6 per cent to Sh5.5 trillion in 2023," KNBS said in the survey.
Mobile money platforms, preferred for their efficiency and cost-effectiveness, have been popular with Kenyans, who adore their convenience and flexibility.
Kenya boasts of being among the leading mobile money economies after China. Some of its leading brands in Kenya are Safaricom's M-Pesa, Airtel Money, and Telkom Cash (T-Kash).
Economic observers state that the number of mobile money users in Kenya is likely to reduce further following the government's plan to increase taxes targeting the sector. The new tax plans are contained in the recently released Finance Bill 2024.
Treasury seeks to raise an additional $2.5 billion (Sh323 billion) in taxes in the financial year beginning in July.
The tax on mobile airtime and data rates is poised to increase to 20% from 15% in the new Finance Bill.
The bill also wants the excise duty on mobile money transfer fees and cash transactions in banks, money transfer firms, and other financial service providers to be hiked to 20 per cent from 15 per cent.
To cushion themselves from the increased tax burden, telecommunications companies will be forced to raise transfer and withdrawal fees.
As of December 30, 2023, mobile money subscriptions dropped to 38 million, translating to a penetration rate of 75.1 per cent, attributed to the drop in the number of mobile (SIM) subscriptions.
Similarly, the Communications Authority said that the mobile money penetration rate, which is the percentage of the population using these services, started at 78.2 per cent in December 2022 and gradually dropped over the year, stabilising at about 75.1 per cent in June 2023.
According to CA, led by Director General David Mugonyi, prepaid plans still dominate, accounting for 65,492,294 out of the total 66,745,709 subscriptions. This leaves just a small fraction, 1,253,415, for postpaid plans.
Safaricom, the market leader, boasts 44,013,156 subscriptions, out of which 42,875,208 are prepaid, with the remaining 1,137,948 being postpaid. Airtel, the second-largest provider, mirrors this trend, with 19,282,993 of its 19,387,460 subscriptions being prepaid and a mere 104,467 postpaid.
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