Payment deals settled through mobile phones and tablets in the first three months of the year rose at the slowest pace in the history of the globally-acclaimed innovation, official statistics have shown. This came at a time when businesses were complaining of depressed demand for goods and services.
Mobile payments amounted to nearly Sh1.087 trillion in the January-March 2020 period, a modest growth of Sh22.3 billion, or 2.1 percent, over Sh1.065 trillion in the same period of last year, latest statistics published by the Central Bank of Kenya (CBK) indicate.
The year-on-year growth in mobile money deals during the first quarter of 2020 is the lowest since M-Pesa, co-owned and operated by Safaricom, was rolled out in March 2007, making Kenya the first country in the world to go live with such an innovation.
Companies reported a sharp slump in orders during the three-month period, with overall business deals in private sector hitting lowest levels in more than two years, according to a closely watched monthly survey — Stanbic Bank Kenya’s Purchasing Managers Index (PMI).
The economic activity has been worsened by the debilitating impact of the public health guidelines such as partial trade lockdowns and travel restrictions announced by the Ministry of Health, to stem the spread of the life-threatening coronavirus.
As part of the sanitary measures, authorities on March 16 also reached an agreement with mobile network operators to waive charges for person-to-person transfers of less than Sh1,000 to encourage cashless payments.
The deal is aimed at cutting down on handling of cash and the attendant risk of the virus being transmitted from person to person. The CBK, the financial services regulator, has consequently more than doubled daily mobile money transfer limit to Sh150,000 from Sh70,000. Daily transaction ceiling has also been raised to Sh300,000 from Sh140,000 with customers now allowed to hold a maximum of Sh300,000 in their wallets, a steep jump from Sh100,000.
The impact of the measures to boost digital payments in the face of the contagious global coronavirus pandemic was expected to be felt from April.
In the January-March 2020 review period, mobile money accounts crossed 58.71 million, the CBK data shows, indicating an additional 8.35 million accounts were opened in the year through March 2020.
Daily transactions averaged Sh11.94 billion in the first quarter of 2020 compared with Sh11.83 billion the year before, while agents stood at 240,261 in March – meaning an additional 13,304 outlets were approved compared to a year earlier.
The CBK data further shows total mobile money transactions in the January-March 2020 period stood at 449.21 million, slightly reduced from 460.11 million to the same period in 2019.
Average value per transaction in the first three months of the year was Sh2,418.43 compared with Sh2,313.69 previously.
“People don’t pay a lot of attention to the capacity and investment done by the mobile network companies especially Safaricom,” Stephen Nduati, who headed the national payments system at the CBK at the time M-Pesa was approved, said in a past interview.
Mr Nduati, now an independent mobile money consultant, added: “When they started, they couldn’t do as many transactions per second. Today, they have invested heavily to have a platform that’s running 24/7. This is helping fight cash transactions.”
Unlike during the formative years when the mobile money platforms were largely used for person-to-person (P2P) cash transfers, they are now increasingly being used to initiate and cut business deals such a purchase of goods and services as well as processing of instant short-term loans.
Major sectors of the economy such as financial services, retail and wholesale trade, agriculture and health have integrated mobile payment platforms such as M-Pesa into their payment systems, largely because of convenience and speed.
Latest data from the Communications Authority of Kenya (CA), the telecoms regulator, for the quarter ending December 2019 shows Business to Business (B2B) mobile payments accounted for the lion's share with transactions valued at Sh859.61 billion
The CA statistics, which differ from CBK's partly due to double counting, indicate B2B transactions were followed by Person to Person (P2P) transfers at Sh684.51 billion, Business to Customer (Sh377.41billion),Customer to Business (Sh294.01 billion) and Customer to Government (Sh9.73 billion).
The Treasury said in 2016 mobile money transactions are deeply entrenched in the daily lives of Kenyans, warning that collapse of Safaricom’s M-Pesa service, which commanded 98.8 percent market share as at last December, would cause widespread disruption in the economy.
The value of transactions in 2019, for instance, stood at nearly Sh4.35 trillion, an equivalent of 44.66 percent of Kenya's Sh9.74 trillion gross domestic product (GDP) during the year.