Kenya, a trailblazer in mobile money transactions in Africa, experienced the slowest growth in transfers last year since 2007, following the government's decision to raise excise duty on transaction fees, Bloomberg reported.
- The value of transactions in the country increased to 7.95 trillion shillings ($49 billion) in 2023.
- The number of mobile wallets also saw a 6% rise, reaching 77.3 million by the end of 2023.
- The 0.5% growth in the value of transactions in 2023 represents the slowest pace since the introduction of the service in March 2007.
Kenya is the second-leading mobile money economy in the world after China, and major mobile money providers in the country include Safaricom's M-Pesa and Airtel Money.
In 2023, value of transactions in the country increased to 7.95 trillion shillings ($49 billion), compared to 7.91 trillion shillings the previous year, as per the data from the Central Bank of Kenya.
The number of mobile wallets also saw a 6% rise, reaching 77.3 million by the end of 2023.
The 0.5% growth in the value of transactions in 2023 represents the slowest pace since the introduction of the service in March 2007. This deceleration is a result of the increase in excise duty on transaction fees, which rose to 15% last year from the previous 12%, as reported by the Kenya Revenue Authority.
The central bank captures data from mobile-money agents, and not from alternative channels such as phone-based apps that have grown exponentially, according to Silha Rasugu, an analyst at EFG Hermes. Challenging economic conditions have also impacted disposable incomes, contributing to the slower growth in mobile money transactions, he said.
"Those transactions reflect the consumer wallet as well," Rasugu said. "It could be a signal of consumers under pressure."
East Africa, which hosts Africa's mobile money giant M-PESA, has registered a decline in activity for two years since 2020. In contrast, West Africa has registered an increase of 25% between 2021 and 2022 keeping up with consistency from 2018.
GSMA credits the performance to freshly liberalised markets, Ethiopia and Nigeria, driven by regulatory reforms and rising demand for digital payments.
Source of the article: Business Insider Africa