Why the Future of Cashless Economy in Kenya Requires Solutions for Kenyan Problems

Kenya’s economy can benefit greatly from the perpetual advancement and acceleration of technology only if the existing landscape of innovation is appropriately utilized.

The country is already one of the global leaders in mobile payments, and the number of people with mobile money accounts, in sub-Saharan countries is rapidly rising. Far from the capability of surpassing the costs of infrastructure, Kenya and the African can reap the benefits of having the most vibrant and tech-savvy individuals in the next ten years.

According to statistics by the World Bank, by 2035 the working age population in Africa will have grown by 450 million people. The working population is projected to hit over 1 billion by 2034. Recently, GSMA released a report that shows that mobile money accounts have grown by 18.4 percent between 2016 and 2017 to hit 33.8 million registered accounts.

The concern is, Kenya cannot wait for more than a decade before enough job favoring policies are realized. What the country needs is to act now and harness the advantages of digital society for economic growth. Kenya can leverage these technological changes to come up with solutions that work for our own problems. The same case goes to all the African countries.

There is no denying that we are already experiencing the substantial potential of digital innovation in the mobile money niche. According to the World Economic Forum, the penetration of smartphones in Africa is projected to hit the 50 percent mark in 2020 up from only 2 percent in 2010.

Kenya, for example, has a total of 45.1 million mobile subscriptions. The figure has significantly pushed the penetration of mobile phones to over 95 percent, as the Communication Authority reported. What this means is that Kenya has a clean canvas for technology-based innovations and ventures.

A touted technological example used all over Africa is M-PESA, which was launched in 2017. This service by Kenya’s leading telcos company, Safaricom Plc, is a testimony on how African countries can make global waves.

There are other countless examples and role models that are an invitation to the next generation of visionary entrepreneurs in the financial technology industry. As these transitions continue to occur, what the country needs are tech-savvy financial institutions and platforms as well as policies that continue to support them as they hold the future of investment opportunities.

According to the Global Findex – the world’s most comprehensive data set on how adults save, borrow, make payments, and manage risk – the Sub-Saharan African mobile money has significantly elevated financial inclusion. The 2018 report shows that the region is home to all eight economies where 20 percent or more of adults use only a mobile money account: Burkina Faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe.

It is, therefore, safe to say that opportunities are bound to increase account ownership for up to 95 million unbanked adults in sub-Sahara Africa receives cash payments for agricultural products, and roughly 65 million save using semiformal methods.

Despite the remarkable progress, African countries barely offer enough support for tech start-ups and initiatives that could ensure the security of these opportunities. Innovating ourselves is mandatory and to profit from the fintech drive, we don’t need to look far.

What Kenya and other countries should look at is how to solve genuine problems that relate to its citizens instead of putting a band-aid around them. Take remittances, for example, there is laxity everywhere and delayed payments are an order of the day particularly with the high fees of between 10 and 20 percent. Technology should be utilized to genuinely solve the problem.

The same technology will help institutions know their customers and understand what their preferences are depending on their context and culture. This way, they will be better placed at using the available data to counter the issue.

Local implementation should be the drive, and definitely not expecting universal results. This is what Kenya and the rest of the continent need for its people. The future is bright and as new innovations are realized every day, the time of grasping the available opportunities is now. That is the only way of driving change and dealing with disruptions in various industries.