The use of mobile money in Kenya has reached new heights, with the value of such transactions surpassing half of the country’s gross domestic product (GDP) in 2021. Data from the Central Bank of Kenya (CBK) shows that mobile money transactions reached 56.8% of GDP last year, up from 48.7% in 2020 and projected to increase to 68% by the end of this year.
The growth in mobile money use has been attributed to the waiving of fees for transactions between mobile money wallets and bank accounts, which was introduced as an emergency measure in March 2020 in response to the COVID-19 pandemic. These fees were reinstated on 6 December 2021, but the transfer of sums of KES 1,000 and below remains free.
The CBK data also reveals a significant increase in the volume and value of mobile money transactions between March 2022 and October 2022. Person-to-person transactions rose by 171% in volume and 71% in value, while transactions between mobile wallets and banks saw a 527% increase in volume and a 410% increase in value.
The growth in mobile money use has been welcomed as a positive development for the Kenyan economy, with the convenience and affordability of such transactions making banking more dynamic and versatile. However, the reintroduction of fees for some mobile-to-bank transactions has raised concerns that it could drive people back to using cash and hinder the growth of a cashless economy.
Mobile money transactions were first introduced in Kenya in 2007 as a way to send money between friends and relatives, but have since expanded to include the payment of bills and government services. The success of such services has seen banks and payment service providers benefit from billions of dollars in fees through mobile banking.
Kenya has been at the forefront of the adoption of mobile money in Africa, with the invention of M-Pesa – a mobile money transaction platform owned by Safaricom – in 2007. The country’s strong mobile money infrastructure has also attracted international investment, with companies such as Visa and Mastercard entering the market.
The continued growth of mobile money in Kenya is likely to have a significant impact on the country’s economy, with the convenience and accessibility of such transactions likely to drive further adoption. The CBK’s decision to reinstate fees for some mobile-to-bank transactions will be closely watched, as it could determine the future trajectory of the country’s cashless economy.