Mobile money transfer increases as postal services dwindle due to competition from internet services

By Ben Kinyanjui

Mobile Money transactions increased by 17.5 per cent from Sh48 billion in the second quarter of last year to Sh56 billion in the last quarter, the Communications Commission of Kenya (CCK) has said.Information and Communications PS Dr Bitange Ndemo says the sector has recorded impressive growth

CCK says in its quarterly report that the money transfer service currently being offered by all the four cellular phone companies Safaricom, Airtel, Essar Communications and Telkom Kenya has continued to gain popularity among mobile subscribers.

“At the end of the quarter under review, there were 18.4 million mobile money transfer subscriptions, representing 69.5 per cent of the total mobile subscriptions,” said the report.

“Similarly, the total amount of deposits made through the mobile phone services grew by 17.5 per cent from Sh48 billion in the previous quarter to Sh56 billion during the period under review.”

It said this represented an increase of 58.6 per cent compared to the same period last year. Safaricom’s Mpesa dominates this sub-sector.

The report said the continued growth is an indication of subscribers’ preference to mobile money transfer, which could be attributed to accessibility and affordability even to low-income earners who form the bulk of the unbanked population.

CCK also reported an increase in internet users to 5.4 million from 4.2 million recorded in the previous period, representing a 27.33 per cent increase. Compared to the same period the previous year, an increase of 67.86 per cent was recorded.

“Internet user reached 14.3 million, meaning that 36.3 per cent of the country’s total population has access to the Internet,” said CCK.

“The period under review witnessed 75 per cent of the total users accessing the service through their mobile handsets, leaving computer and other modes of access with only 25 per cent.”

The communications regulator said computer connectivity which includes bandwidth costs could be considered expensive compared to mobile connectivity which is easier and faster.

It said continuous service innovations by mobile operators which have made the service attractive to majority of subscribers could also explain this disparity on accessibility modes.

It also said the international connectivity bandwidth received a boost of 615.97 per cent during the review period though the usage still remained low with only 2.33 per cent, an indication that a lot of capacity is yet to be utilized.

It said mobile data/Internet is poised to transform the Internet market in the country saying with the number of mobile data/Internet subscriptions rising steadily over the period, this trend is likely to continue as operators leverage on emerging technologies to bring new offerings to the market to meet user demands.

“Consequently, intense competition is likely to continue as operators seek to diversify their services in an effort to grow their revenue margins,” it said.

It said projects geared towards utilizing this capacity such as local content development should be encouraged to provide a critical foundation for a thriving information society where an increasing level of decision-making takes place based on digitally transmitted data, information, and knowledge.

On mobile phone subscription, the report said there were 26.4 million mobile subscriptions up from 25.3 million recorded in the previous quarter, representing an increase of 4.8 percent.

However, the total number of main fixed line -fixed terrestrial lines and fixed wireless-subscriptions decreased to 355,493 from 374,942, posting a decline of 5.19 per cent.

Also on the decrease is the postal sector that recorded a downward trend except for international outgoing traffic that recorded significant growth during the period.

CCK says the sector continues to grapple with stiff competition from the mobile operators, which has impacted negatively on their postal services particularly on local letter mail volumes.

“Diversification of services and growth strategies in new business areas as well as improved operational management could go a long way in mitigating this trend,” the report says.