This archive report was first published on 19 August 2019.
Kenya's shift towards digital payments has been a gradual process, with mobile-money services driving the trend. According to the Communications Authority of Kenya (CA), the net value of transactions stood at Ksh.2.1 trillion at the end of March, representing a seven percent jump in the average value of a single transaction, quoted at Ksh.2,704.
Mobile financial services (MFS) subscriptions have also seen a significant increase, with 784.4 million subscriptions recorded, and the number of mobile-money agents in the country has risen to 223,084.
A report by the Central Bank of Kenya (CBK) backed Financial Sector Deepening (FSD) highlights the continued dominance of cash in daily transactions. The report notes that while digital cash is competitive in clearing less frequent payments, Kenyans still rely on cash for recurring expenses such as school fees and goods and services.
“Is the continued dominance of cash masking a trend towards digital?” the report poses. “With the exception of the employed, most people receive their incomes in cash. This does appear to be changing however, with farmers, business owners and the employed receiving less money in cash and more via digital in 2019 compared with 2016.”
Experts argue that the rise in digital payments is being masked by the continued use of cash. Abojani Investments Chief Executive Officer Robert Ochieng notes that tracking and recording digital payments can be complex, citing the example of person-to-person transfers (P2P) in mobile money.
Kenya Bankers Association (KBA) Head of Research Jared Osoro argues for the expansion of the digital payments landscape to beyond just payments, emphasizing the need to strengthen the case for digital solutions in financial services.
“Payments are necessary but not sufficient there being no add-on products that speak to intermediation,” Osoro said.
Consumer Federation of Kenya (COFEK) CEO Stephen Mutoro notes that while big events in finance have provided impetus towards the adoption of digital transactions, the case for validation in Kenya remains informed by a slow and gradual process.
“The future is certainly towards digital despite there being challenges including taxes. It would be however important to focus on ways and means to sustain digital transactions,” Mutoro said.
