Fees waiver lifts mobile deals to record Sh392bn

Cash transacted through mobile phones and tablets rebounded from a 26-month low in April to hit an all-time monthly high in June after the State started easing Covid-19 containment measures amid a waiver of fees for sending up to Sh1,000 and free bank-to-mobile wallet transfers to encourage digital transactions.

Households and business closed deals amounting to Sh392.17 billion in June, official statistics show, setting a new record in mobile payments during the month when President Uhuru Kenyatta extended business operating hours for the first time since April.

The data collated by the Kenya National Bureau of Statistics (KNBS) indicate the value of June’s mobile transactions represented a 9.74 per cent, or Sh34.8 billion, growth over May’s value, and 13.07 per cent, or Sh45.32 billion, jump over June 2019.

“That number (June’s mobile payments) is not surprising given the relaxation in containment measures to re-open the economy and the policy guidelines by the central bank,” said Robert Nyamu, the financial services partner and lead technology consultant at audit firm EY East Africa, via telephone.

"(But)You will be surprised, if you look at the data, to find that apart from the middle-class and B2B (business-to-business) transactions, a lot of transactions are done in values below Sh1,000 to the extent that some people are now breaking down the transactions to below a Sh1,000 just to try and fit in and avoid the fees."

The Central Bank of Kenya (CBK), bankers and mobile network operators on March 16 reached a three-month agreement that waived for mobile transfers of less than Sh1,000 to encourage cashless payments, before the regulator unilaterally extended the relief to December.

The deal, aimed at cutting down on handling of cash and the attendant risk of the global coronavirus being transmitted from person to person, also covers free bank transfers to mobile wallets.

Mobile payment deals, however, thinned 14.5 per cent, or Sh52.23 billion, year-on-year in the first full month of the financial services relief in April to Sh307.99 billion — the lowest levels since February 2018 — before the contraction eased a marginal 1.89 per cent, or Sh6.88 billion, in May.

Economic activity in April were hardest hit by reduced business operating hours as a result of 7pm-5am curfew, closure of hotels and restaurants as well as cessation of movement out of Nairobi, Mombasa, Kilifi, Kwale and Mandera except for cargo transportation.

This eased slightly in May as restaurants, eateries and other businesses were conditionally allowed to re-open in May, lifting sales which had plunged to a fresh low a month earlier due to reduced demand as companies were shedding jobs, slashing salaries and adopting un-paid leave policies to cut operating costs.

President Kenyatta on June 6 shortened the curfew hours to 9pm-4am from previous 7pm-5am in a gradual easing of the Covid-19 containment measures aimed at enabling businesses “have a full work day schedule”.

This helped lift small traders such as salons and barbershops which also increasingly use mobile money as payment mode.

“Somebody looking outside in might get the impression that the economy had some of its best month in years in June; which is not the case. It's just mobile transactions which went up because of the policy guideline for people to move from cash to online and mobile payments,” Mr Nyamu said.

“The economy on aggregate is still depressed as some aspects are still pushing along, almost like a car in third gear and others like tourism and hospitality have taken a hit and are still stalled.”

Stanbic Bank Kenya’s Purchasing Managers Index (PMI) — a monthly measure of private sector activity — climbed to 46.6 in June from 36.7 a month earlier, 34.8 in April and 37.5 in March, but remained lower than 49.0 in February and January (49.7).

This signaled easing in contraction of business deals towards the 50 mark that denotes growth.

The KNBS data, sourced from the CBK, show the number of mobile money transactions — which had in April fallen to lowest volume since August 2017 at 124.99 million— recovered to 143.14 million in June, although it was still below the pre-Covid levels.

Some 5,481 mobile money agents, however, shut down outlets in June in one of the highest closures in recent years.

Prior to June, the previous drop in agents was last posted last October and November when the outlets fell from 224,959 in September 2019 to 223,176 and 222,211 in subsequent months.

The value of mobile payments in the January-June period amounted to Sh2.144 trillion, the data shows, a flat 0.4 per cent growth compared with Sh2.135 trillion in the same period in 2019. The record monthly deals in June did not, however, overturn the hit from Covid-19 shocks in April and May with second quarter value (April-June) falling marginal 1.29 per cent to Sh1.057 trillion year-on-year.