Mobile money transactions up by 9pc in Q2 to Sh2.1 trillion on recovering economy
By Alfred Onyango |
The growth is mainly attributed to the upsurge in mobile money transactions and increased diaspora remittances in the period under review.
Kenyans transacted more cash in the three months to June this year, exhibiting signs of an economic recovery in the period under review.
The latest quarterly data by the Kenya Institute for Public Policy Research and Analysis (Kippra) shows the value of mobile money transactions increased by 9.3 per cent to about Sh2.1 trillion as of June 2024.
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This is from Sh1.9 trillion recorded in the same period last year. The growth is mainly attributed to the upsurge in mobile money transactions and increased diaspora remittances in the period under review.
The increasing use of mobile money has sparked competition between mobile money wallets and commercial banks, as Kenyans gradually abandon cash-based transactions, which remain dominant, in favour of digitally enabled alternatives, particularly mobile money.
A recent study by the data company, Global Voice Group (GVC), shows that mobile money and remittances will continue to dominate Africa's economic development.
This is on condition that they be supported with tools to boost data-driven transparency and compliance.
Kenya, which is a leading pioneer in mobile money transactions, saw transfers grow last year at the slowest pace since 2007 when the service was introduced.
The Central Bank of Kenya data shows the value of transactions rose marginally to Sh7.95 trillion in 2023, compared with Sh7.91 trillion in the previous year. This was after the government raised the fees charged for money transfer services by cellular phone service providers from 12 to 15 per cent.
The number of mobile wallets during the period jumped six per cent to Sh77.3 million. The 0.5 per cent growth in the value of transactions in 2023 was the slowest pace since the service was introduced.
Some experts argued that the slow growth last year could be a reflection of the constrained consumer wallet from the hiked fees, and the general economy which was on the downturn triggered by the runaway inflation and the weakening of the local currency.
The diaspora inflows, which have also been attributed to substantive contribution to the growing mobile money transactions, increased in 2023 by Sh20.7 billion.
Remittance inflows reached an all-time high of $4.19 billion (Sh540.4 billion) in 2023, compared to $4.03 billion (Sh519.7 billion) in 2022, an increase of 4.0 per cent.
However, experts in the sector have warned that African governments must ensure the implementation of effective monitoring solutions in the mobile money and remittance sectors to combat money laundering through these new channels.
Data from the World Bank shows that remittances account for at least 10 per cent of the GDP of emerging and developing countries.
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