Cash handled by mobile money agents dropped for the sixth consecutive month, with the value declining to Sh666.6 billion in August.
Nevertheless, the volume of mobile money transactions climbed in the period to hit 208.6 million in August from 184.8 million deals in a similar time last year, pointing to the handling of lower transaction values by the agents.
The decline has been partially attributed to discretionary spending amid macroeconomic headwinds characterised by the high cost of living.
“It does in part point to the impact of inflationary pressures on discretionary spending with consumers focusing on small value transactions hence the decline in the value of mobile money transactions,” noted Ronny Chokaa, a research analyst at Genghis Capital.
The sustained volumes of transactions by mobile money agents show the resilience of the cash-in-cash-out ecosystem, which remains unscathed despite disruptions from alternative payment channels including bank accounts to mobile-money wallet transactions.
While mobile money agents have come under pressure in recent years, the agents have remained at the centre of mobile money deals particularly in semi-urban and rural settings.
“In some areas especially in suburban and rural areas, the role of mobile money agents remains important. Additionally, a lot of people have opened accounts with alternative mobile money platforms which require visiting agents especially when interoperability challenges occur,” noted economist Ken Gichinga.
The role of mobile money agents is nevertheless set to evolve as more consumers favour transactions beyond merely making deposits and withdrawals.
For instance, a consumer can move funds from their bank account to mobile money wallet and pay for goods and services without transacting through a mobile money agent.
Data from telecoms provider Safaricom, which owns the M-pesa mobile money platform, show a slowing momentum of deposits and withdrawals.
In the fiscal year ended March 2023, the value of deposits grew slower at 17.8 percent against a 32.2 percent cumulative annual growth rate (CAGR) while growth in withdrawals eased to 3.2 percent against a 6.4 percent CAGR over the last four years.
Growth in the volume of M-Pesa deposits meanwhile stood at 6.6 percent in the year against a four-year CAGR of 9.6 percent while the volume of withdrawals grew by just 4.7 percent compared to eight percent CAGR.
The role of mobile money agents could diminish significantly should withdrawals and deposits, require actors to innovate.
“Telecommunication providers need to redefine the role of agents. Agents will continue playing a crucial role given they are at the heart of physical connections between telcos and their customers,” added Mr Gichinga.
“Agents could, for instance, serve as the termination point of last-mile delivery for enterprises in e-commerce and logistics.”
Data from the Central Bank of Kenya (CBK) put the number of mobile money agents at 333,428 as of August.
Safaricom listed the number of its mobile money agents at 262,310 in the fiscal year to March.
The CBK has kept close tabs on the ecosystem as it seeks to stimulate mobile money transactions to be a key pillar of the economy.
Last month, for instance, the apex bank announced higher limits for mobile money transactions and the size of the mobile money wallet.
Payment service providers offering mobile money wallets were cleared to increase their daily transaction limits from Sh150,000 to a maximum of Sh250,000 and the size of the mobile money wallet from Sh300,000 to Sh500,000.
“The new transaction limits and wallet size will support customers, businesses and institutions, including government agencies to make and receive digital payments in larger amounts, thereby increasing the convenience of mobile money services in Kenya,” the CBK noted.
