This archive report was first published on 7 December 2019.
Mobile banking has become the preferred choice for many Kenyans, with a significant decline in agency banking transactions in 2018. According to a report by the Central Bank of Kenya (CBK), payment of retirement and social benefits through agency banking declined by 94% to Sh1.1 billion in 2018, down from Sh19 billion in 2017.
Despite the overall increase in the value of transactions, there was a decline in transactions relating to payment of retirement and social benefits and payment of bills in the year 2018, said CBK in the report.
“One of the important benefits of the new programme is that it reduces distances covered by beneficiaries in accessing banking services as well as reducing over-reliance on care givers by giving beneficiaries more control of their accounts,” said Labour and Social Protection Cabinet Secretary Ukur Yattani last year when they unveiled the programme.
Since its inception in 2004, the government has spent Sh125.7 million on the Inua Jamii programme, which targets a total of 1.3 million households, with around five million Kenyans being direct beneficiaries. The programme operates through four banks - Cooperative, Equity, Postbank and KCB.
Consumers are also trying to reduce distances in accessing banking services when paying bills, with payment of bills through agency banks reducing by 15.5% from Sh13.7 billion in 2017 to Sh11.6 billion in 2018.
During the period under review, 19 commercial banks and five microfinance banks had contracted 59,578 and 2,026 agents, respectively, recording a decrease from 61,290 and 2,068 agents respectively by December 2017.
“The decline is attributed to the closure of some of the agents due to low business volumes and low income earned by the agents, rendering the agents inactive,” said CBK.
