This article will evaluate the state of mobile penetration and uptake in Kenya, drawing from several data sources that examine mobile penetration, mobile internet usage, and mobile money. 

The Mobile Penetration Rate in Kenya

Gathering concrete data on Kenya’s mobile penetration rate is difficult, as independent studies define mobile penetration differently. However, using a combination of sources, we can approximate how prevalent mobile phones are in the market and how much mobile penetration is expected to grow over the coming years.

The World Bank’s pointer is mobile cellular subscriptions, which as per the latest data in 2019, places the figure at 104%. The Kenya Government’s Communications Authority defines mobile users by SIM penetration, and as of June 2020, reported a 119.9% mobile penetration, a 10% growth from the previous period. We must note that the extra penetration rate is driven, to no small extent, by the ownership of multiple SIM cards, as price-sensitive consumers take advantage of the different offers of the various mobile network providers.

GSMA defines mobile penetration by unique mobile subscribers to counter the drawback of counting total subscriptions, which stood at 59% in 2017. A study conducted by Pew Research in 2017 found that 80% of adults in Kenya reported owning a mobile phone, with 30% owning a smartphone and 50% owning a basic phone.

No matter how you look at it, Kenya’s mobile penetration is higher than the average of the rest of Sub-Saharan Africa and continues to snowball as more and more previously unconnected people, and regions in the country get access to mobile services. 5G technology is now being trialed in Kenya, and GSMA estimates that Kenya will have 7 million new mobile subscribers by 2025.  

Mobile Internet Usage in Kenya

In addition to the penetration of basic mobile services such as voice calls and SMS, it is essential to look at internet and smartphone penetration. Digital connectivity plays a vital role in transforming and improving lives, as it opens the door to employment, financial opportunities, and inclusion for people across the world. There has been a rapid growth in internet penetration in emerging regions over the last decade, with the Boston Consulting Group (BCG) forecasting that more than 90% of all new internet users will come from emerging markets.

For a country that relies so heavily on the mobile phone, it is not surprising that internet access skews towards mobile internet in Kenya. The Kenya Digital Report found that 97% of all internet users in Kenya access the internet on mobile phones, with Kenyans spending over four and a half hours every day using the internet on their phones. As a segment of the overall population, GSMA places the mobile internet penetration rate in Kenya at 27% of the people, representing one of the highest five-year growth rates in Africa.

The growth in mobile internet use in Kenya correlates with a rise in smartphone usage, driven by the emergence of cheaper smartphones and a relatively young population actively looking for information and connection online. This prevalence of smartphones has gradually made Kenya a favorite launchpad for several mobile-based services, including mobile money, targeting the region. 

M-Pesa and Mobile Money Usage in Kenya

It is difficult to talk about mobile in Kenya without discussing mobile money. Kenya leads the world in the adoption of mobile money services, which enable sending and receiving of money through mobile-based accounts, with 96% of households owning a mobile money account.

Mobile money in Kenya is almost synonymous with M-Pesa (which means mobile money in Swahili), which refers to the global market leader in mobile money, Safaricom’s M-Pesa. M-Pesa holds a nearly universal market share of 98.9% of the Kenya mobile money market. Since its launch in 2007, M-Pesa, and by extension other mobile money providers, have contributed positively to Kenyans’ financial inclusion. Transactions performed on mobile money providers include paying for commodities and services, taking out loans, opening savings accounts, making payments for government services, and betting, among others. In an otherwise severely unbanked population, 73% of adults were financially included in 2017; and of these financial account holders, 98% held mobile money accounts.

Mobile money is so crucial to Kenya’s economy, with at least 50% of Kenya’s GDP flowing through mobile money, that most mobile money transactions were zero-rated to shield citizens from the effects of COVID-19. In GeoPoll’s 2020 Year-End survey, we found that customers were using mobile money more frequently in 2020 than in the previous year, likely driven by COVID-19 and a desire to use contactless payment methods.

Conclusion

The mobile phone has become essential for day-to-day life around the globe. As more and more people worldwide get connected to phone services, regions experience growth as it becomes easier for information to flow and citizens to access banking and other essential services. Casting a glance at mobile penetration levels in different areas globally, it becomes clear that countries with better mobile access rates are typically economically stronger than countries with less connectivity. This may probably be one of the keys to inclusive growth globally, as is apparent in Kenya. The growth of mobile penetration in Kenya has led to increased employment and income generation, which manifests as more people get access to phones.

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GeoPoll, whose largest office is based in Nairobi, leverages the growing power of mobile to conduct surveys throughout Kenya and sub-Saharan Africa. We reach people on their own mobile devices through SMS surveys, voice calls, and web-based methodologies and conduct in-person surveys recorded on mobile devices to reach those who do not have access to their own mobile phones. For more information on our mobile methodology, please contact us today.

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The way global currency is exchanged certainly has evolved in recent decades. We now have the power to make payments via a variety of cutting edge digital avenues. Some parts of the globe have made more strides than others, but payment technology has been widely adopted in Sub-Saharan Africa in the past few years. Below we explore the two key players in digital financial management and how they stack against each other in sub-Saharan Africa.

What is a Privately-Owned Mobile Money Service?

A privately-owned mobile money service refers to an entity unaffiliated with any large-scale financial institutions that offer mobile payment services, such as PayPal or Venmo. It allows one to make and take payment, from or to an entity, at any time.

In sub-Saharan Africa, the biggest player in mobile money is M-Pesa. M-Pesa is a revolutionary money transfer service initiated by a mobile app. M-Pesa was launched in 2007 by Vodafone for Safaricom and Vodacom, it’s defined as a “financing and microfinancing service.” Today, it’s forecasted that this particular region will have 500-million cell phone subscribers to the service by 2020.

What is Mobile Banking Service?

Mobile banking service is similar to mobile money in that you can manage your money remotely through a mobile app. However, mobile banking service is offered by financial institutions and it doesn’t quite offer the same functionality as a mobile money service. With mobile banking, you can mostly deposit and withdraw your finances, make transfers, and check your payment history.

How Do the Two Compare in Sub-Saharan Africa?

The adoption of mobile money in sub-Saharan Africa has skyrocketed in recent years, particularly in the East African countries. It now holds an astounding share of the world’s mobile payment transactions. Ultimately, it was mobile money that paved the way for bank-owned mobile financial services in this region.

Growth Rates

In its financial inclusion survey, The World Bank’s Global Findex Database found that 21% of adults in this region have a mobile money account, which is near twice the share it was in 2014 and the highest in the world.

It was this growth that proved how lucrative mobile money management was in SSA. It’s also why, just recently, sub-Saharan Africa became the ideal breeding ground for bank-owned mobile financial services. Now, both financial management options are growing substantially in unison.

Demographics

While bank-owned mobile finance services have allowed people to better manage their financial risks and household finances, it seems only to be better suited for middle or higher income households. This is largely due to the fact that in order to participate in mobile banking, you need to have a bank account.

Mobile money market practitioners recognized the need for lower-income households to have access to mobile money management without the need for a bank account. They focused their efforts on providing financial transfer services with the need for bank affiliation.

Social Impact

Mobile money has created a positive ripple effect for other industries, such as water and sanitation, education, energy, and agriculture. One example is the Dar es Salaam Water and Sewage Corporation, which was able to increase their revenue by 38% in 2013 by offering mobile money as a method of payment.

On the other hand, bank-owned mobile money services rely more heavily on the social responsibility of the financial institution. That being the case, it does seem like SSA’s key financial institutions actively incorporate social responsibility into their mission. For example, Standard Bank, Africa’s highest ranking bank, is a Global Funder of the HER Campaign, which aims to curb HIV infections among teen girls and young women. Although a worthy cause for support, there is room for banks to focus their efforts toward more relevant projects like improving financial inclusion overall in their country or region.

Challenges

Despite the growth of both innovations in mobile financial management, there are still some unique challenges within each. For mobile money, the competition of the market is increasing as more companies take note of the potential. With bank-owned mobile financial services, high fees are one of the biggest drawbacks.

For both, rural areas of sub-Saharan Africa are still emerging; network access being the biggest key player here. GeoPoll predicts that both entities will experience future growth in this region as the benefits of each become more widely recognized, and as more organizations partner to spread resources to rural areas.

In terms of predicting that growth and the growth in a wide array of other markets, GeoPoll offers one-off surveys, ongoing data collection, and pre-built data products for brands, media houses, international development organizations, and humanitarian aid groups. Our research solutions provide critical insight that helps you make high-profile decisions in regards to your specific segment. Contact us today to get started!

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More than half of the global mobile money market is rooted in Sub-Saharan Africa, yet Nigeria lacks the financial infrastructure that could make mobile banking accessible to all Nigerians. Chief Operations and Information Officer of Fidelity Bank Plc commented, “When you open an account on your mobile, you can receive money but you cannot make payments. You need a Bank Verification Number to make transactions on that account you opened on mobile. Since the targets for financial inclusion are people that don’t have BVN already, some infrastructure needs to be deployed, like mobile BVN.”

In 2017, The International Monetary Fund reported that informal enterprises made up to 65% of Nigeria’s overall GDP. There are many reasons for the pervasiveness of undocumented business in Nigeria, yet issues with financial inclusion in the country likely contribute to the fact. A report from Lagos Business School stated that only 49% of Nigerian’s have bank accounts, which indicates the power held in cash currency throughout the nation.

In this report, we will build on what is already known about Nigeria’s banking infrastructure and examine intricacies of personal finance management in Nigeria.

Survey Methodology and Sample

GeoPoll set out in late 2018 to gather data on mobile money use in Nigeria. The data was collected from 500 unique respondents from GeoPoll’s mobile survey panel in Nigeria. There were half female and half male respondents, and all participants were required to be 18 years old or older. Respondents came from all SEC groups, with the highest portion of respondents falling in SEC groups B and C1. Respondents come from 29 of Nigeria’s 36 states, with 33% of respondents living in Lagos, 17% in Kano, and 10% in the Federal Capital Territory. The survey was conducted in English over SMS. The following report presents the data collected from Nigerians on their financial preferences.

Consumer Insights

Of the 500 Nigerians surveyed, 94% of respondents reported using a mobile money service of some sort in the past. Those who had previous experience using a mobile money service were asked to rate their experience with mobile money services, and 82% rated their experience as average or better than average. The prevalence of respondents who have used mobile money in this survey, compared to what we know about access to banking in the country, could be due to the survey sample, which is of literate, mobile-owning Nigerians. Also possible is that there is a misinterpretation of the term “mobile money” and respondents are not distinguishing between mobile money service and regular bank transactions on a mobile device. Additionally, these results show that the majority of respondents for this survey have access to a BVN or bank account, which is not the case for all Nigerian people. It is important to note that many Nigerians choose not to use mobile money regularly because the people they do business with do not use mobile money and prefer cash. This can explain why some Nigerians do have financial access to mobile money and choose not to use it.

Of the 6% of respondents who have not used mobile money services, 43% stated that they do not have the application on their devices. This finding could potentially tie into the power of financial inclusion in Nigeria, which could be a contributing reason that kept these respondents from participating in mobile money transactions.

Our final finding for this report regards preferred payment methods. All survey respondents were asked to report their preferred mode of payment for goods and shopping. Mobile money was preferred least at 19%, while debit cards, cash, and credit cards received 31%, 25%, and 24% of responses respectively.

It is interesting to note the prevalence of cash as consumers’ preferred payment method. 94% of respondents have used mobile money in the past, yet 25% of the respondents prefer to pay cash for goods and services. Most of the 25% of respondents who prefer cash theoretically would have access to banking yet still choose to use cash most, even prefer it. This again alludes to the culture surrounding payment methods in Nigeria being starkly different than many other countries in Sub-Saharan Africa, where mobile money is a popular form of payment.

Summary

Nigeria is a powerful player in Africa with the largest economy in the continent. Nigerians are well connected through mobile phones necessary for mobile banking, yet regulations are holding back this development. Mobile money is an important resource for the citizens of Nigeria because it provides a safe place to store and save funds over time. Due to the poor banking infrastructure in Nigeria, cash is still a prominent method of payment, even for Nigerians who may have a bank account. This will likely not change until mobile banking is accessible to all Nigerians who own mobile phones. If you would like to conduct your own study on mobile money, contact us today!

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