The value of transactions cleared and settled through RTGS and the Kenya Electronic Payments and Settlement System (KEPSS) fell to Sh6.63 trillion. FILE PHOTO | NMG
Traders settled an average of Sh2.21 trillion monthly in the period compared with Sh2.33 trillion last year, latest statistics by the Central Bank of Kenya (CBK) show.
Financial analysts largely attributed the drop to a slowdown in economic activities earlier in the year compared with the same period in 2017 when there was increased public spend on infrastructure development ahead of the presidential campaigns.
Real-time bulky payments dropped by Sh373.05 billion in the first three months of the year, marking the first-ever such drop and pointing to an economic slowdown.
The value of transactions cleared and settled through the Real Time Gross Payment System (RTGS) and the Kenya Electronic Payments and Settlement System (KEPSS) fell to Sh6.63 trillion during the January-March period from Sh7 trillion a year earlier.
Traders settled an average of Sh2.21 trillion monthly in the period compared with Sh2.33 trillion last year, latest statistics by the Central Bank of Kenya (CBK) show.
Financial analysts largely attributed the drop to a slowdown in economic activities earlier in the year compared with the same period in 2017 when there was increased public spend on infrastructure development ahead of the presidential campaigns.
There is also a possibility of traders splitting payments using other channels to avoid regulatory scrutiny that comes with transactions upwards of Sh1 million that must be done on the RTGS.
Head of financial services and lead risk adviser for East Africa at consultancy and audit firm EY Robert Nyamu linked the dip in the electronic payments to a relative economic downturn before the March 9 truce between President Uhuru Kenyatta and Opposition chief Raila Odinga.
“The dip was more of a transitory impact coming from political instability from the last quarter of 2017, and we should expect RTGS payments to increase going forward,” Mr Nyamu said.
“There could be some people smurfing so they don’t have to disclose transactions for KYC (know your customer) reasons, but to me that’s in the minority.”
Payments of more than $10,000 (Sh1 million) are strictly done on the RTGS following a directive to commercial banks by the Central Bank Kenya governor Patrick Njoroge on February 16, 2016 in the wake of the first National Youth Service (NYS) scandal in late 2015.
Customers withdrawing more than Sh1 million through banking halls are required to disclose the source of funds, reason for withdrawal and identity of the beneficiaries by filling a form.
Financial institutions are also required to report any suspicious or unusual transactions to the Financial Reporting Centre (FRC), the agency operationalised in April 2012 and mandated to identify and combat money laundering and financing of terrorism.
“All customers making transactions that meet the stipulated amounts will be required to complete a form that captures the source of funds, reason for the transaction rather than electronic means and where the money will be taken after it leaves the bank,” Dr Njoroge had warned.
