Monday, June 8, 2020

Kenya leads the way in using digital financial services in Africa

Kenya leads the way in using digital financial services in Africa
Kenya leads the way in using digital financial services in Africa
Kenya is currently the African country that most uses technology for financial transactions. About 80% of the adult population makes use of technological financial services.

Kenya has the largest and most successful mobile financial services sector in Africa and has consistently led the continent, both in scale and in innovation, says a study on digital financial services published by the World Bank.

The study concludes that 65% of adults in the poorest economies do not have access to the most basic services, which allow them to send and receive money easily, efficiently and securely, unlike Kenya where “mobile money” services, particularly useful in this pandemic phase, are used by more than 80% of the adult population.

Kenya's success started, in 2007, Kenya's largest telecommunications company, Safaricon, launched a tool that extended the already traditional credit transfer system - M-Pesa. Yes, most did not have a bank account, for a variety of reasons, but 27% of the population had active cell phones and another 27% had access to these devices. And those numbers are growing every day.

Kenya's secret, as the study's authors (Ceyla Pazarbasioglu, Alfonso Garcia Mora, Mahesh Uttamchandani, Harish Natarajan, Erik Feyen and Mathew Saal) refer, was a “test and learn” approach, hidden in good regulatory architecture, in contrast to conservative approach taken in other countries. The study places countries in four stages of development. Countries 1 have the countries with basic digital financial services and countries 4 have the most advanced ones, such as China, USA and Sweden.

Kenya is the only African country that is in phase 3. Algeria, Ivory Coast, Egypt, Ethiopia, Ghana, Morocco, Mozambique, Nigeria, Senegal, Tanzania and Zambia are in phase 1, alongside Bangladesh, Indonesia, Pakistan, Peru and Vietnam. Brazil, India, Thailand, Turkey and Kazakhstan are in phase 2.

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