Kenya's Finance Minister Uhuru Kenyatta is set to launch the National Payment System Bill, which is intended to safeguard public savings as mobile banking gains a hold in the country. The last three years have seen a staggering 150% rise in the number of banked Kenyans. Michael Schwartz summarises.
Uhuru Kenyatta, Finance Minister of Kenya, has provided an update on the National Payment System Bill which soon to be tabled in the Kenyan parliament. Once the Bill becomes law, it will help to safeguard public savings in the face of growth and innovation in mobile banking. Backdrop to the Bill is the amazing rise in the number of banked Kenyans - from 2.5 million three years ago to the present 6.4 million, a surge of over 150% (Central Bank of Kenya statistics).
In addition to the rise in banked citizens, the Kenyan Government is tabling the Bill in the context of two other major developments. First, there is recognition of the large amount of money in Kenya which is not protected by the conventional financial system. Secondly, next year will witness the arrival of the East African Submarine System, a cabling complex which will see Mombasa linked into a major regional asset. Greater bandwidth capacity will mean speedier transactions.
Uhuru Kenyatta has also called for unbanked transactions to be made affordable to the less well-off. Mobile banking is currently available from two mobile companies, Safaricom and Zain, and they hold the 6.4 million mobile banking accounts. This in turn has been picked up by the CEO of Equity Bank, Dr James Mwangi, who called for a clear path for mobile banking specialists when regulation was taken into account.
Dr Mwangi put Africa's current rate of banking into context when he declared, "In Africa just some 4% of the 700 million population on the continent are banked leaving over 96% unbanked." Turning to Kenya he noted that long distances which customers had to travel to banks made financial services difficult in physical and financial terms, "In some rural areas while a bank customer will spend just under US$0.38 on bank fees, the individual will spend over US$7.70 traveling to the urban centre and back, which makes it rather difficult." The words "rather difficult" are a masterpiece of under-statement...