From the Banking Expert: Towards Cashless Society

By Zak Syengo / May 3, 2019




One of the most interesting experiences in a neighboring country made me think about a cashless society, and the progress Kenya has made.

I arrived at the leading airport slightly past 6 pm to traumatic inception. First, there were goats at the runaway, and at some point, they had to be chased away for flights to take off. The check-in counters were dusty and the laggard staff around looked drained and demotivated.

The questions they asked made me feel like a drug dealer or more conveniently an arms dealer. Over the many years of my travel, nobody has ever asked me whether I had a gun, they normally take us through a normal inspection, sometimes very stringent at some airports.

At the hangar, were two Kenya Airways planes, signs that we still dominate the region. I thought about the discussions about KQ managing Jomo Kenyatta International Airport (a discussion for another day). Once I finished with check out, I walked over to a very dilapidated car park, interestingly combined with a waiting bay.

My host was holding a placard with a misspelled name and a large new black bag almost equivalent to gym package. He ushered me into a waiting car and took the driver’s seat. I can’t remember the conversation to the hotel, I was conspicuously absent-minded.

At the hotel, my host carried the bag with him. The mysterious bag that he would not let go. He placed it next to a seat near our dining table. At some point, I was thinking a conversation about gold would come out, a usual stereotype in this country. The atmosphere was ripe for that. However, we had an uneventful dinner, until the time to clear our bills came.

Obviously, I was prepared to use my card, it is a common practice across the world. My host discouraged me and reached out to the black bag to pay. He opened it and the view of bundles of bound notes scared me to hell. It is long since I saw such amount of bank notes, needless to say, in a bag. I felt like an associate of an arms dealer.

The phenomenon of cash payments is a worrying trend in most countries in Africa due to the risks involved in handling cash. While some countries are slowly appreciating mobile money and card payments, a lot of transactions are still in cash. South Africa, a leading economic hub, is expected to reach over 25 million smartphone users by 2022, driving payment solutions through cashless systems widely accepted in the country.

No wonder South Africa has made significant steps towards a cashless society. Kenya, due to innovations around mobile telephony and adoption of other means of payment has is following closely. The government despite a few setbacks, is championing digitization in the country. More than 250 government services are available digitally through the country’s e-government platform, e-Citizen. Over 90 percent of all digital payments on e-Citizen are made through mobile money. This is really encouraging.

A few sectors are dragging behind the process towards digitization. The matatu culture is one significant factor. When President Uhuru Kenyatta launched a transport system management card called 1963 in partnership with Safaricom, many thought Kenya was on course to a cashless society. But this card didn’t last. The crew realized that all the proceeds will go and be managed by the owner of the matatu, and their cash cow had been drained. The adoption was slow and my opinion some rate of sabotage percolated.

Of course, our retail system, driven more by shops that supermarkets are the other significant driver of cash-led payments. What makes it even more convenient is the access to credit from shopkeepers and the fact that shops are all over the estates.

The advent of financial technology that is slowly taking the place of banks in terms of convenient and small tickets of credit will definitely boost our resolve to a cashless society. A lot of this credit is pushed through mobile money that provides easy payments at convenience stores. However, the matatu culture will remain a hurdle to a cashless society.





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