Data from the Central Bank of Kenya (CBK) has revealed that money transacted on mobile phones amounted to more than half of all the goods and services produced in the economy by the end of 2021, reaching 56.8 percent of GDP.

This was an increase from 48.7 percent in 2020 and is projected to further increase to 68 percent by end of this year. In 2021, mobile transactions were valued at Sh6.7 trillion against a GDP of Sh12.1 trillion.

The new data highlighting the impact of the just-ended free services as Kenyans took advantage of the waivers to transact on their handsets introduced in March 2020.

On December 6, the CBK announced the reintroduction of charges for transactions between mobile money wallets and bank accounts as part of the emergency measures to enable the use of mobile money during the Covid-19 pandemic.

Millions More Kenyans Use Mobile Money

For the period March 2022 to October 2022, the number of people using mobile money leapt by over 6.2 million as Kenyans took advantage of the free transactions that later included the transfer of sums of Sh1,000 and below.

The CBK data shows that the monthly volume and value of person-to-person transactions during this period rose dramatically from 162 million transactions worth Sh234 billion (an increase of 171 percent) to 440 million transactions worth Sh399 billion (an increase of 71 percent).

The monthly volume and value of transactions between mobile wallets and banks also increased, from 18 million transactions worth about Sh157 billion (an increase of 527 percent) to over 113 million transactions worth Sh800 billion (an increase of 410 percent).

From March 2020 to December 31, 2022 Kenyans were not charged to transfer money from their mobile wallets to bank accounts or vice-versa, during which time the value of mobile transactions surged to Sh7.2 trillion by end of last November.

Excise Duty Dividend

The huge expansion in mobile money transactions did not go unnoticed by the Kenya Revenue Authority with the government introducing an excise duty of 10 percent on financial transactions. Excise duty on financial transactions was subsequently increased to 20 per cent in the Finance Act 2018.

Revenues from excise duty on financial transactions have more than doubled from Sh13.7 billion in June 2017 to Sh28.9 billion in June 2021.