Kenya’s digital economy has realised a steady in the last five years as mobile money transfer takes the where cash-in and cash-out transactions amounted to a total of $61 billion in 2023.

At the launch of the Kenya Digital Economy report in Nairobi on October 22, government officials expressed optimism about the ability of digital technologies in the economic transformation of Kenya. 

The report says that by 2014, mobile money account ownership surpassed traditional financial institution accounts and accounted for 70 percent of the adult population in 2021, with 24 percent of adults saving through mobile money 

The Central Bank of Kenya reported 77 million registered mobile money accounts at the start of 2024, while the Communications Authority reports 38.7 million active mobile money subscriptions as of the end of March 2024.

There were 320,000 active agents at the start of 2024. Values for agent cash-in and cash-out transactions amounted to a total of $61 billion in 2023, with significant growth achieved over the years in volumes and values.

The report examines the role of digital technologies in the economic transformation of Kenya. The starting point is an analysis of how digital technologies can drive socio-economic development through enhanced productivity and job creation, as well as how they can be used to improve how government functions. It identifies opportunities and quantifies the economic value of adopting digital technologies across specific sectors of the economy. 

Margaret Nyambura Ndung’u, the Cabinet Secretary, Ministry of Information, Communication and the Digital Economy, said that digitalisation of the economy presents a huge opportunity to address many economic challenges facing Kenya given that the mobile money sector has experienced exponential growth and is the backbone of this digitalisation process. 

“Our digital transformation agenda also seeks to ensure digitization of public services to enhance service delivery to our citizens. What this means is that we have a corresponding responsibility to enable our citizens to have access to ICT services through facilitating affordability of services and devices,” said Ms Ndung’u

Under the Digital Government Services E-citizen Portal, 15,692 services are fully on-boarded on the E-citizen portal and now, 5,000 services are being rolled out to Gava Mkononi E-citizen mobile app. The services include passports, visas, birth registrations, company registration services, taxation, customs, and other government services. 

The sector has been classified as part of the five sectors that form the core pillars of the economic transformation plan which include; Agriculture, Micro, Small and Medium Enterprise (MSME) economy, Housing and Settlement, Healthcare, Digital Superhighway and Creative Economy.

Kenya is a regional leader in mobile connectivity and Mobile Financial Services (MFS). It pioneered the use of mobile money, making huge strides in financial inclusion of the unbanked, and has retained its position as a global leader in this area.

 Further extending its reach as the enabler of electronic payments across the digital economy, as well as traditional sectors, can propel digitalisation and growth for many more Kenyans and achieve increased resilience and revenue for the government.

According to David Mugonyi, Director General of the Communications Authority of Kenya, the Government’s Digital Transformation Agenda seeks to deploy 100,000 kilometres of fibre, 25,000 WI-FI hotspots and 1,450 ICT hubs across the country within the next three years. 

At the end of June 2024, Kenya had more than 68.9 million mobile subscribers, translating to a mobile penetration rate of 133.7 percent. At the same point we had 39.8 mobile money subscriptions; working out to a penetration rate of 77.3 percent. In the same period, 66.1 million mobile devices connected to mobile networks representing a penetration rate of 128.3 percent.

The comparative penetration rates for smartphones and feature phones were 68.3 and 59.9 percent, respectively. Today there are 38.4 million mobile broadband subscriptions in Kenya compared to 1.5 million fixed data subscriptions. 

“In the last five years, we have connected about 800,000 people across 24 counties to mobile network services through the Universal Service Fund, opening new opportunities in communication, expanding knowledge and stimulating entrepreneurship,” said Mr Mugonyi.

The government is funding the deployment of 2,500 Km of fibre optic cable across 19 unserved and underserved counties at the cost of KSh. 5 billion as part of the Digital Superhighway, with 1,300km already laid.

“However, to achieve our national digital aspirations, we, the public and private sectors, must act in concert to address the dual challenges of device affordability and insufficiency of digital skills which continue to hold back the rapid development of our digital economy,” he said. 

The digitalisation of the economy is a key driver for socio-economic growth and government revenue and can offer new opportunities for pathways to growth, job creation and diversification of the economy. 

The Internet economy is projected to reach 5.2 percent of the GDP in Africa by 2025, and the development of the digital ecosystem has been shown to add up to 1.9 percent in GDP per capita in Sub-Saharan Africa.

 The mobile technology sector is key to realise this potential and the associated economic value, given mobile devices are the most common means of internet and financial access in Africa. For example, 10 percent increase in mobile Internet penetration is estimated to increase GDP per capita by up to 2.5 percent in Africa.

However, the mobile sector in Kenya continues to face several policy and regulatory challenges that risk undermining the future sustainability of mobile infrastructure and jeopardising the gains achieved in digital and financial inclusion. If these challenges are addressed, the mobile sector can support a greater economic impact through increased access, adoption and usage of digital technologies. 

There remains a large usage gap – individuals covered by mobile networks but who do not use them. Over 65 percent of the population remains unconnected to mobile internet.

Ms Ndung’u said that through the private sector and other donor-funded projects, much more ground has been covered making meaningful connectivity a reality in hitherto unconnected areas.  

“In respect to infrastructure development, the Government, through the mechanism of the Universal Service Fund, is facilitating the rollout of 2,500km of high-speed fibre optic cable in 19 underserved and unserved counties across the country. About 1,300 km of fibre optic infrastructure has already been laid,” she said.