Corona cuts high value M-Pesa transactions by Sh1.2bn daily

Daily average mobile money transactions for deals above Sh1,000 each have dropped 18.4 percent in the period Kenya imposed coronavirus movement restrictions, highlighting the impact of the infectious disease on workers and the cash flow of businesses.

Central Bank of Kenya (CBK) data shows that the daily average mobile transactions for high-value deals dropped to Sh5.57 billion between April 20 and May 10 compared to Sh6.83 billion before March 16—just four days after Kenya announced its first Covid-19 case.

This represents a daily drop of 18.4 percent or Sh1.26 billion in a period when most companies have cut down their activities, shed jobs and placed workers on unpaid leave in response to the pandemic.

However, the decline was counterbalanced by the growth in mobile transactions of less than Sh1,000 each, which rose 83 percent to Sh1.98 billion daily.

But the rise was not enough to offset the drop in high value deals, cutting the overall worth of mobile transactions by 4.7 percent or Sh370 million.

“The bands 101-500 and 501-1000 have recorded increased transaction volumes and values. This confirms that the waivers of fees for up to Sh1,000 encouraged more mobile money transactions,” CBK Governor Patrick Njoroge said.

Under an initial 90-day deal with the government, telcos and other firms involved in mobile money transfers waived all charges for transfers of less than Sh1,000.

This was aimed at cutting down on the handling of cash and the attendant risk of the virus being transmitted from person to person.

Dr Njoroge did not comment on the decline in transactions above Sh1,000, which account for 72 percent of all mobile transactions.

The biggest drop was for transactions of between Sh35,001 and Sh70,000, which fell 35.7 percent to Sh819 million.

It was followed by deals between Sh1,001 and Sh10,000, which dropped 32.4 percent to Sh2.45 billion.

CBK did not provide data on how individual telcos handled the mobile money, but Communications Authority of Kenya (CA) figures show that Safaricom via M-Pesa controlled 99.9 percent of the cash transfers in the quarter to December.

Airtel and Telkom Kenya held less than 0.1 percent mobile phone cash transfers.

Safaricom #ticker:SCOM CEO Peter Ndegwa declined to comment on the CBK data and how they will affect the telco’s earnings.

The company on April 20 said it would take a Sh5.5 billion hit on its M-Pesa revenue in the three months from mid-March after it waived transaction fees on mobile money transfers under Sh1,000.

The waiver was part of the quest for cashless payments to curb the spread of the coronavirus.

The foregone revenue is equivalent to 6.5 percent of M-Pesa’s annual sales.

In the financial year that ended in March, M-Pesa accounted for about a third of Safaricom’s Sh251.2 billion revenue.

Daily mobile transactions of between Sh501 and Sh1,000 jumped 131 percent to Sh1.23 billion.

Kenya, which has reported 1,400 cases of Covid-19 and 52 deaths, has suspended commercial flights in and out of the country, banned public gatherings and imposed a dusk-to-dawn curfew since mid-March.

It has also halted movement in and out of five counties most affected by the virus, including Nairobi and Mombasa.

The impact of social distancing and closure of businesses like bars and restaurants has impacted on consumer spending, setting the stage for job cuts and unpaid leave for workers.

A recent State survey laid bare the cash flow crunch facing households.

Majority of landlords have snubbed State calls to reduce rent for workers hit by the effects of coronavirus, which saw a third of households fail to pay their April rent, the Treasury revealed Tuesday.

The national survey conducted between May 7 and 9 by the Kenya National Bureau of Statistics (KNBS) on the impact of the disease on households revealed that 21.5 percent of homes defaulted on rent.

More than half or 52.8 percent of those who defaulted on rent cited reduced incomes while 22.4 percent said they had been placed on unpaid leave.