The Kenyan economy is showing signs of recovery, as card and mobile money transactions have rebounded this year, driven by increased economic activity. Information sourced from the Central Bank of Kenya (CBK) reveals that there was an increase in card payments within the economy during the first two months of 2023. The recorded value for this upsurge amounted to Sh114.8 billion, which is higher than last year’s corresponding period figure of Sh110.9 billion by a substantial margin. The value of mobile money transactions through agents also rose to Sh1.17 trillion from Sh1.15 trillion previously.
This rebound in cashless transactions has boosted expectations of a return to growth, following a decline in 2022 attributed to economic shocks associated with the General Election, the Russia-Ukraine war, and the removal of transaction fee waivers introduced during the Covid-19 pandemic.
The growth in transaction values is attributed to various factors, including the reopening of schools, more Kenyans entering the job market, population growth, and the increasing number of people getting banked. Additionally, the introduction of the Hustler Fund and rising inflation have led to more digital borrowing, further driving growth in mobile money transactions.
The convenience of mobile money platforms has also led to a shift in how businesses operate. Business owners now find it more convenient to deposit cash at mobile agencies and then transfer it to the bank, saving themselves the hassle of queuing in banking halls and the risk of transporting the cash physically to the bank branch.
Furthermore, the Covid-19 pandemic played a significant role in the growth of cashless transactions. Recommendations and incentives were put in place to discourage the use of hard cash, which was deemed a potential avenue for spreading the virus. As a result, the use of bank cards for shopping and mobile merchant payment options gained popularity.
Numerous financial institutions have established a connection between their networks and mobile monetary platforms, enabling patrons to transfer funds from their bank accounts onto their personal devices or vice versa through the same means. Mobile money platforms were initially used primarily for person-to-person cash transfers but are now a major payment channel for businesses. As the paradigm has been altered, it resulted in a surge of funds being transferred through the wallets. The transformation prompted an increase in monetary flow via this method.