Kenya: Pandemic-led growth in digital payments positive for banks and Safaricom
- Covid drives digital payment transactions to record-high
- Transaction volumes growth to remain strong in H2 and in 2021
- We expect the central bank to lift its ban on transaction fees next year, boosting bank and Safaricom revenues
Digital payment transactions jumped by 28% yoy to hit a record KES474bn (cUS$4.4bn) in August, according to data from the Central Bank of Kenya. With the central bank having banned fees on digital payments (mobile money) in a bid to stimulate the Covid-stricken economy, mobile transactions increased by 30% between March and August. The key driver of this growth was the spike in larger transactions.
While we expect transaction growth to remain strong in H2, there could be a slight fall in transaction volumes in the first half of 2021 as we expect the central bank to lift the ban on fees in January. Even then, we expect transaction volumes in 2021 to still be higher than the historical average.
In the event of the central bank lifting the fee waiver, we expect banks and Safaricom to record higher revenues from fee and commission income.
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This report is independent investment research as contemplated by COBS 12.2 of the FCA Handbook and is a research recommendation under COBS 12.4 of the FCA Handbook. Where it is not technically a res...