Mobile money.
Since its inception in 2007, mobile money has become the backbone of Kenya’s economy contributing a substantial amount to the country’s Gross Domestic Product (GDP).
Mobile money which began with Mpesa before other players like Airtel Money and Telkom’s T-kash joined the market has been a benchmark for countries seeking to implement mobile money to drive economic growth.
According to a report by GSMA, mobile money has boosted GDP by 8.6 percent, which is equivalent to the contribution of manufacturing and real estate sectors.
“Mobile money’s contribution to Kenya’s economy at the end of 2023, the total GDP in Kenya was Sh3.1 trillion ($24 billion) greater than it would have been without mobile money – an increase of 20 percent compared to the year before. This is equivalent to mobile money increasing GDP by up to 8.6 percent, similar to the contribution made by the country’s manufacturing and real estate sectors,” the report reads in part.
The report found that since 2013, the contribution of mobile money to the economy has doubled, bridging the gap between the banked and unbanked population. A 2021 report indicated that only 41 percent of Kenyans have bank accounts. With increased mobile money adoption thanks to high mobile phones (smartphones and feature phones) adoption, financial inclusion has improved negating the need for a bank account for one to send and receive money.
In the 2023 report, GSMA found that mobile money has the ability to increase a nation’s GDP by 0.4 to 1.0 percent each year in low to middle income countries.
ALSO READ: The Role Of Open Finance In Kenya’s Financial Sector
Mobile money is significantly driving social economic impact to a huge number of households. Prior to mobile money transactions in Kenya, sending and receiving money was an uphill task since individuals had to visit bank branches to send the money, which slowed the speed of transactions. With Mpesa and Airtel money, the transaction speed has increased significantly boosting economic activities, creating employment opportunities and helping in poverty alleviation.
“Mobile money reduces transaction costs for users and helps households manage their cash flow, enabling them to smooth consumption and manage risk. Mobile money allows enterprises to expand by facilitating faster and more efficient transfers. As a result, mobile money can lead to an increase in poverty reduction, employment, and gross domestic product,” the 2023 report reads.
The Central Bank of Kenya (CBK) has been pushing for adoption of a fast payment system which is likely to see more integration of mobile money and bank accounts. This has however caused jitters among banks and mobile money service providers. As to whether such integration will be effected or not, one thing is clear, mobile money has become an indispensable part of everyday life for most Kenyans.
