Mobile money payments declined considerably in 2017.
The growth of mobile money payments declined considerably in 2017, raising queries about the health of the economy.
Most recent data from Central Bank of Kenya shows that growth of mobile money payments reduced from 19 per cent in 2016 to 8 per cent in 2017.
In 2015, Kenyans transacted Sh2.81 trillion on their mobile phone, in 2016 Sh3.35 trillion while last year, the figure stood at Sh3.63 trillion.
“Months of political uncertainty affected economic activity. Many sectors did less business than usual which translated into decelerated growth in payment channels in general,” said Mr Stephen Nduati, former head of national payment systems at the CBK, who now works as an independent consultant on mobile money in Kenya.
Experts attribute the lengthy political campaigns last year reduced Kenya’s economic growth and forced a number of companies to downsize and some to close down fully, reducing the purchasing power therefore less money in circulation.
Banks have also increased their interest in developing their own easy mobile money payment solutions that’s taking part of the business away from telecoms and other mobile first companies.
The launch of services that offer direct bank-to-bank transfers have attracted lots of users. This means that mobile first providers must keep innovating to attract and retain a wide customer base.
Pesalink, a service introduced by Integrated Payment Systems Limited (IPSL) last year to facilitate real time bank-to-bank transactions has also taken a piece of the market share dominated by mobile systems providers in the country.
Michael Mbuthia, Chief Information Officer at IPSL, said that mobile money payment has been active for the platform.
“We moved Sh25 billion in the one year we have been in business, and we expect to see this grow exponentially this year. What sets us apart from mobile systems is that our customers can transfer any amount from Sh10 to sh999,999 in a single transaction,” he said.
Safaricom has been the leaders of mobile money payments in Kenya, developing MPesa into a diversified product that serves a cross-section of customers.
Other players in the mobile money payments market include the new innovation like M-Akiba, which allows users to buy government bonds via phone, Airtel Money, Equitel, MobiKash and Tangaza Pesa. None of them succeeded in secure a double digit growth in 2017.
The slowdown in mobile money payments is an essential indicator of economic anxiety for low earners in Kenya who control mobile transactions, as many stay outside the official banking system.
Card and direct bank money transfers through the Kenya Electronic Payment Settlement System (KEPSS) remained strong. KEPSS, through which people transfer large volumes of money through banks, leapt back from a drop of -1.2 per cent in 2016 to register a growth of 0.3 per cent in 2017.
“Tough economic times bite poor people the hardest, while the wealthy remain relatively cushioned against turbulence, especially if it is short-term. Which is why transactions by rich people might even have gone up during the election period as they had more time to spend money,” said Mr Nduati.