Mobile Money 1 year into a pandemic – a shift away from cash towards a cash-lite economy

September 30th, 2021

2020 was an epic year for mobile money. The Covid-19 pandemic, and the responses to it, precipitated an increase in mobile money usage by nearly every metric. The number of users, agents, the values deposited and withdrawn from agents, person to person and customer to business transactions all increased substantially but the story goes deeper and drivers of change are not always as clear as they may seem. In this blog we’ll explore the actions and innovations that drove mobile money in Kenya to new heights during the pandemic.


In mid-March 2020, in order to facilitate the increased use of mobile money transactions instead of cash, the Central Bank of Kenya worked with mobile money operators to:

  • Remove charges for transactions up to Ksh 1,000
  • Increase the transaction limit to Ksh 150,000
  • Increase the daily limit to Ksh 300,000
  • Eliminate the monthly transaction limit
  • Eliminate charges for transfers between mobile money wallets and bank accounts

In June, these measures were extended to run to the end of the calendar year and were replaced with updated guidelines that removed or amended the majority of these measures starting on January 1st 2021.

According to the Communications Authority of Kenya, in the period October to December 2020, the total value of mobile money transfers almost doubled (a 97% increase) compared to the same period the previous year, to over 4 trillion Ksh. The most significant area of growth was transactions between customers and businesses, which covers the purchase of goods and services and also customers transferring funds between their mobile money wallet and their bank accounts. A deeper analysis of the increased uptake of digital payments can be found in the accompanying blog Digitisation, business and payments in the time of Covid. 

total value of mobile money transfers

2Value of Mobile Money Cash In Cash Out Transactions
Figure 2
Value of Mobile Money Cash In Cash Out Transactions Performed at a Mobile Money Agent – Data Source Central Bank of Kenya

During the same period, the value of Person to Person (P2P) transfers increased by 53% to over 1 trillion Ksh.

It is likely that this increase was caused by a number of factors including:

  • increased need for internal remittances and financial support by family and friends as the economic downturn impacted people’s ability to earn
  • the use of personal wallets as mobile money tills by small scale merchants and the increased use of mobile money to pay for goods and services
  • the inability to move freely and transfer funds to family and friends in cash

Unfortunately, data is not available on the volume of transfers for each category, making it impossible to calculate the average value of transactions for each period. This makes it impossible to assess if the average transfer amount dropped significantly, which would indicate an increase in the amount of lower value transfers and would be an indicator that the CBK measures to increase use of mobile money across the population had been effective.


Whilst data is only publicly available for Safaricom’s Lipa na M-PESA product, mobile money payments increased massively since March 2020. The value of Safaricom’s merchant payments increased 46% to KShs 970 billion and the volume of payments almost doubled to 686 million, year on year to the end of March 2020. During the same period, the mean average value of transactions fell by 25% from KShs 1,885 to KShs 1,415.

We can see from the chart detailing the quarterly breakdown of the value of Lipa na M-PESA transactions that mobile money payments were hit slightly in the first three months of the pandemic and then rebounded strongly, 27% in the second three month period. From the end of year figures, we can infer that this high level of usage was maintained, or even increased even after transaction fees were reintroduced for transactions under KShs 1,000 in early 2021. This is hugely significant in the evolution of a cash lite economy as it would suggest that the actions taken to increase digital payments during the pandemic not only increased short term usage but may have accelerated a more fundamental shift away from cash. 

Value of MPESA transactions

This growth is even more significant at a time when survey’s such as the Covid-19 Tracker Study conducted by FSD Kenya and Kantar, the Finmark Trust’s Covid-19 Tracking Survey and the World Bank’s Monitoring Covid-19 Impact on Households in Kenya all indicate that households reduced their spending, in some cases dramatically, during this time period. This means that not only did digital transactions grow but they took an increasing share of a shrinking market.


According to the communications authority of Kenya the number of active registered mobile money subscriptions increased 12% or 3.5 million accounts, year on year between December 2019 and December 2020. This growth is impressive considering that the year before the number of active subscriptions fell by 8%.


Figure 3 Communications Authority of Kenya

Whilst it appears that the pandemic had a significant impact on this increase, with the number of active accounts increasing steadily after April 2020, the nature of this impact is less certain. It would be reasonable to assume that this increase was driven by new users wanting to use digital payments in the face of physical restrictions but that is not necessarily the case. This increase could be the effect of:

  • new customers registering and using mobile money accounts for the first time
  • existing customers using existing mobile money accounts that they’ve not before ever
  • existing customers using existing mobile money accounts that they’ve used before but not for over 90 days

It is also possible that customers with multiple SIM cards have started using the mobile money facilities on more of the lines available to them, in order to access an increased number of digital overdraft and digital loan products. How much of the increase can be accounted for by new users and how much by increased use by previous users is impossible to tell. These ambiguities prevent us from definitively answering the crucial question, did the pandemic increase the number of actual people using mobile money or did it deepen usage of existing users?


After the beginning of the pandemic, users started depositing increased amounts of cash into their digital wallets. According to data from the Communications Authority of Kenya, between October and December 2020 inclusive, the value of deposits made at mobile money agents increased by 81% from the same period the previous year and broke the Ksh 1 trillion mark for the first time.


Mobile money withdrawals as a % of mobile money deposits by value at agents

Figure 1: Mobile money withdrawals as a % of mobile money deposits by value at agents. Source: Communications Authority and Central Bank of Kenya

Not only was more cash deposited, a higher percentage of the deposits stayed digital. Figure 1 shows the value of mobile money withdrawals as a percentage of the value of mobile money deposits. Between October and December 2019, for every Ksh 100 deposited at an agent, Ksh 83 were cashed out at an agent, between October and December 2020 this fell 38% to just Ksh 51 for every Ksh 100 deposited.

This could mark a significant shift in the nature of the mobile money ecosystem. This indicates a move from a service where customers deposit cash, make a transfer and the recipient cashes out the transfer to spend it, to the start of a cash-lite economy where cash is deposited and used digitally in exchange for goods and services, reducing physical currency transactions. However, it is likely that a large but unknown portion of the increase in cash deposits were due to businesses taking advantage of the removal of fees for transferring between mobile wallets and bank accounts. It appears that this removal of fees prompted many businesses to use the mobile money agent network to deposit cash and transfer it to their bank accounts. This phenomenon is explored more in the accompanying blog Digitisation, business and payments in the time of Covid.


The number of active mobile money agents increased by more than 30% in the 9 months between April and December 2020, according to the Communications Authority of Kenya. This is a significant increase considering that data from the CBK shows that in the whole of 2019 the number of agents increased only 11%.


The value of commissions paid out also increased significantly and, whilst data is not available for all mobile money providers, Safaricom’s Annual Reports indicate that between March 2019 and March 2020 over Ksh 28 billion were paid out. This is an 18% increase from the previous year. However, this means that average weekly commission values fell by 17% from Ksh 2,644 to Ksh 2,188 between March 2019 and March 2020. Average agent commission value is now at its lowest level since at least 2014, when this data started being made available, and it is highly likely it is at its lowest ever level.

Understanding the geographic distribution of agent expansion would be crucial to understanding the real impact, opportunities and risks that this will bring about. If the pandemic increased demand for mobile money services in areas where previously there was too little demand to sustain a viable agent business then we could be witnessing a significant change in the frontiers of mobile money and financial inclusion. However, if this increase has been driven by a drop in urban earning combined with a lowering of barriers to becoming an agent then it is possible that this dramatic increase in agents will lead to oversaturation in certain areas and could damage service availability and levels for customers. Currently there is no public data available to get to grips with what these changes in the mobile money landscape really mean.


The value of deposits and withdrawals or cash in cash out (CICO) transactions performed through mobile money agents increased significantly after the start of the pandemic. Between 2017 and 2019, the average year on year growth in value of CICO transactions for December was 7.5%. In December 2020 the year on year growth rate was 58%. This means that for every shilling that passed through a mobile money agent in December 2019, 1.5 shillings passed through in December 2020. At the same time, the average value of value of CICO transactions increased 43% from Ksh 2,419 in March 2020 to Ksh 3,459 December 2020.

average value of value of CICO transactions

This increase likely has two causes:

  • Individuals converted cash to mobile money for personal use
  • Businesses took advantage of the removal of fees for moving value between a mobile money wallet and bank account to use the mobile money agent network to deposit money into their bank accounts

The increase in average transaction value, along with other reasons which can be explored in the accompanying blog Digitisation, Business And Payments In The Time Of COVID suggest that the second of these reasons likely accounts for the larger percentage of the increase.


International remittances are hugely important to the Kenyan economy and Kenya is fortunate to have a very resilient diaspora who continued to send money back during the pandemic. The AfDB African Economic Outlook 2021 highlights Kenya as being the only African country which registered an increase in the value of remittances during 2020.

Mobile money is an increasingly important part of this eco-system. Safaricom’s M-PESA Global service, which allows users to send money directly to Rwanda, Tanzania and Uganda, globally through Western Union and also allows users to shop around the world using Paypal, increased the value of transfers by 76% to KShs 290 billion shillings year on year. To put this in context this value is the equivalent of 83% of the total value of inbound remittances reported by CBK. It is important to note that these figures are not directly comparable as the M-PESA Global figures contain money both sent and received internationally as well as the PayPal payments, where the CBK data only counts receipts. However, the value of international transfers now passing through this single mobile money provider shows what an pivotal role mobile money is coming to play in facilitating international transactions.


It is worrying, though not surprising, that with incomes hit hard by the pandemic, the value of mobile phone based gambling in the country has continued to rise. According to Safaricom, the value of bets placed through M-PESA increased by 1% to almost Ksh 137 billion. Whilst the % increase may not sound significant, in the context where nearly two thirds of households reported a significant drop in income and 30% reported missing between 3 and 5 meals a week in August 2020, any increase in unproductive spending should be of concern.

To put these figures into context, the value of bets placed through M-PESA in 2020 was equivalent to 24% of the total value of exports of the country.

According to a 2018 GeoPoll survey, Kenya has the highest number of gambling youth in Sub-Saharan Africa with a majority of users being male. In an economy where an increasing % of the population are becoming dependent starting their own business, it is worrying that so much potentially productive capital is being squandered. The Micro, Small and Medium Enterprise report of 2016 conducted by the Kenya National Bureau of Statistics found access to capital to be one of the major barriers to the sector. The same report found that between 2013 and 2016 MSMEs were able to access only Ksh 221 billion per year in credit. Whilst there would be significant behavioural, regulatory and technical challenges to overcome, if technology could be leveraged to redirect just a small percentage of the value currently being spent on gambling to the crowd funding of MSMEs, this could have a significant impact on macroeconomic recovery and household level financial stability.


The growth in the use of mobile money services during the first year of the pandemic was been unprecedented. More people are sending and spending more and mobile money has become further ingrained in people’s lives. Not only is more hard currency being converted into mobile money but what is being converted is staying digital for longer. What remains to be seen is if this growth represents a simple response to the extraordinary circumstances brought on by COVID-19 or if it marks an inflection point which represents a real and substantive move towards a cash-lite economy. We look forward to watching the market over the next 12 months and will continue to tease out the stories as we go.



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