Mpesa is a word ingrained in every Kenyan’s lingua franca. The mobile money service that was founded in 2007, and run by telecommunication giants Safaricom, is a force of nature that has led the country to top the world in this sector.
It is this dominance that has in turn fuelled the rise of another sector – e-commerce – as majority of online sellers rely on mobile money to receive payments from their customers.
A new report by Visa, entitled “E-trade advancements across Sub-Saharan Africa” ranks Kenya third in total volume of e-commerce in 2019 and 2020. South Africa sits in first place of total volume, while Nigeria sits in second place. Accounting for population and size of the economy, Kenya is indeed punching above its weight. Much more than its peers.
Last year alone, the government collected revenues of $1.64 billion, and it estimates that by 2025 this will grow to $2.54 billion.
E-commerce transactions in the country are mainly driven by cross-border merchants. The report indicates that this shows potential for the local e-Commerce market to develop and presents a need to examine if sufficient acquiring infrastructure exists domestically to enable these players
“E-Commerce has experienced phenomenal growth rates around the world, and even recent setbacks as a result of the continuing Covid-19 pandemic haven’t stopped its rise,” said the report.
According to the report, e-commerce sales are projected to grow to $7 trillion across the globe by 2024. And Kenya stands to reap much of this growth.
Mobile money transactions in the country rose to $33 billion between January and June 2021, a 52% increase from $21 billion in the same period last year, according to the Central Bank of Kenya (CBK).
On average, Kenyans transferred $180 million each day through their mobile phones in the first half of this year while registered mobile money accounts increased by 6 million to 67.8 million accounts at the end of June 2021 from 61.7 million at the end of June 2020.
Similarly, the volume of mobile money transactions increased to 175.8 million transactions in June this year, from 143.1 million transactions in June 2020.
The increased uptake of mobile money is having an effect on job creation in a country struggling with high unemployment and inequality levels. The Central Bank indicates that active mobile money agents increased to 301,457 in June, the highest level on record, up from 237,637 agents in the same period a year.