Kenya's value of notes in circulation stood at Sh317.4 billion at the end of 2021.
During the same period, Sh30 trillion was transacted electronically mostly under the Mpesa platform, which translates to three times of the country's Gross Domestic Product which stands at slightly over 10 trillion.
The Sh30 trillion figure therefore circulating through the electronic space points to a market that has moved away from a cashless system without legislation.
Businesses not accepting cash as a mode of payment are increasing day by day. Numerous businesses politely request buyers to pay through Mpesa, Airtel money and other available electronic money transfers.
Today, it is possible to pay seamlessly all bills in a month via the electronic method; from rent to boda-boda rides. Despite such strides towards a cashless economy, a small population remains glued to the historical ways of transacting. Some of these peculiar ways, include a parent visiting their bank to withdraw cash and then physically deposit the same into a school account at a different bank. They then later travel miles to the school to hand over a deposit slip for receipting, yet the school has a pay bill number or electronic payment mode.
It is not uncommon to find Kenyans making trips to a bank ATM to withdraw cash for shopping then travel to a supermarket to pay for foodstuff only for the supermarket chain to incur cash in transit charges to return the same cash to the bank the following day. This happens even as supermarkets have point-of-sale gadgets where shoppers can swipe debit cards conveniently at no cost.
The ongoing plan to move to a single-pay bill number for all government payments is timely, although it is facing resistance, especially from school-paying parents. To move the country towards a cashless economy is the way to go in a fast-moving modern world.
Most countries are deliberately moving to a cashless economy. Sweden for instance, had set a 2023 deadline for all citizens to convert bank notes into electronic form, to attain 100 per cent cashless status. China has moved into QR codes payment with WeChat and Alipay controlling more than 90 per cent of payments. Further, the government has issued a virtual Yuan. Closer home, Nigeria leads Africa with AFRI Go, a universal card issued by Nigeria's Central Bank which has looped all banks to promote a cashless economy. South Africa too crossed the 50 per cent mark of using cashless transactions with Payshap.
In Kenya, financial institutions are reluctant to share the electronic network and therefore shield customers from peers through transactional charges, thus hampering efforts to gain cashless status. We need a regulator to step in and enforce the move to a cashless system. A clear illustration of the above is evident in our shopping malls where you can have numerous ATMs majority unutilised yet a network sharing agreement among players will save costs by having a few universal machines.
Kenya should encourage a cashless economy through initiatives like phasing out popular low-value notes such as the Sh50, cessation of currency printing, introducing universal point of sale and ATMs for all financial players, and then full implementation of e-Citizen payment portal for government services.
The writer is a financial analyst
