Mobile money lifts Kenya account holders to 82 pc

The proportion of adults holding financial accounts in Kenya hit 82 per cent in 2017, the highest in Sub-Saharan Africa, buoyed by efficient mobile money systems, a new World Bank report showed.

This is an improvement from 2014 when an estimated 75 per cent of the adult population had financial accounts, the 2017 Global Findex Database showed.

Kenya leads other Sub-Saharan Africa economies including South Africa (73 per cent); Gabon (64 per cent); Uganda (62 per cent); Ghana (60 per cent) and Nigeria (53 per cent).

The report showed that globally the share of adults with an account is now at 69 per cent in 2017, an increase of seven percentage points since 2014. These numbers translate into 515 million adults who have gained access to financial tools. In 2011 account ownership was estimated at 51 per cent.

In high-income economies 94 per cent of adults have an account compared to an average 63 per cent in developing economies.

The growth in account ownership in Kenya has been largely driven by extensive use of mobile money solutions, which make it easier and cheaper to send and receive money as well as to take out loans.

Most account owners have both a financial institution and a mobile money account. This is reflected in how people make mobile payments. The report showed that 40 per cent of adults in Kenya only use a mobile account to make such payments.

Almost half of Kenyans surveyed prefer operating both financial and mobile accounts, 25 per cent own mobile accounts only and nine per cent own accounts at financial institutions only such as banks and Saccos.

Data by the Central Bank of Kenya (CBK) reveals Kenyans transacted Sh3.6 trillion via mobile money platforms in 2017, an eight per cent increase from the Sh3.4957 trillion transacted in 2016. Ownership of mobile money accounts in Kenya as at December 2017 stood at 37.38 million.

According to the 2017 Findex report, the majority of those without financial accounts resided in rural areas with up to 31 per cent of them citing lack of sufficient funds. An estimated 18 per cent claimed the high cost of financial transactions was a put off.

The report further said most Kenyan adults mainly operated financial accounts for savings purposes.

“Making or receiving digital payments is one important use of an account. Saving is another,” It said.

The majority account holders in Kenya (37 per cent) said they were saving money to start business, while 33 per cent did so to finance education of their dependents. Another 15 per cent said they were saving for retirement, same as those keeping funds for emergencies.

Savings have been known for speeding up economic growth or economic recovery during recessions. Savings provide cushions that help in absorbing economic shocks by sorting out expenses without worsening the financial position.

However, to realise the full economic importance of saving, the 2017.

Findex report points out that savings should be made in a financial institution.

“If saving is not deposited in a financial intermediary like bank or stashed for any reason there is no chance for those savings to be recycled as investment by business.”

READ: Financial inclusion in Kenya high, but gaps still persist

Data by the CBK showed that gross domestic savings fell to Sh795.1 billion last year from a record Sh806.995 billion in 2016.

Savings to Gross Domestic Product ratio fell from 11.2 per cent to 10.3 per cent. This was mainly attributed to tough economic times as a result of the prolonged electioneering period that led to massive job losses in the private sector, resulting to most Kenyans depleting their savings to make ends meet.

But even as the global account ownership grows, gender inequality persists.

The Findex report showed that globally 65 per cent of women have financial accounts compared to 72 per cent for men, a sticking trend since 2011. In developing economies, the gap remains unchanged at nine percentage points.

Globally, about 1.7 billion adults remain unbanked with nearly all of them found in the developing world. An estimated 56 per cent of the un-banked adults are women.