THE AFRICAN BUSINESS FORTUNE MAGAZINE ISSUE #006 The African Business Fortune Magazine | Page 52

THE AFRICAN BUSINESS FORTUNE - TECHNOLOGIES

E-payments driving Kenya’s
economic growth
Electronic payments in kenya contribute USD 70 B to GDP

By Brian Tirok

E

very day, electronic card transfer payments are initiated by
individuals, institutions or companies.
The use of card payments be it prepaid, debit or credit card has grown by
leaps and bounds in Africa and more
particularly Kenya.
The Kenyan electronic card market
remains in its early stages, but it is
growing quickly despite heavy competition from Mobile money services like
M-PESA.
To capture the untapped market,
banks, card issuers and retailers are
launching prepaid card variants for
instance Kenya’s retail chain, Nakumatt has employed on the same after it
launched the Nakumatt Global MasterCard Prepaid card, enabling cash-less
technology.
Visa Incorporated released a 2016
study conducted by Moody’s Analytics
that analyzed the impact of electronic

payments on economic growth across 70
countries between 2011 and 2015. Those
countries in the study make up almost 95
per cent of global GDP.
The study in the 70 countries found
that increased use of electronic payment
products added USD 296 billion to GDP,
while raising household consumption of
goods and services by an average of 0.18
per cent per year.
In addition, they estimate that the
equivalent to 2.6 million new jobs was
created on average per year over the fiveyear period as a result of increased use of
electronic payments.
Mark Zandi, Chief Economist of Moody’s
Analytics noted that Electronic payments
are a major contributor to consumption,
increased production, economic growth
and employment creation.
“Those countries which saw large increases in card usage also saw larger
contributions to overall growth in their
economies,” he said

53 THE AFRICAN BUSINESS FORTUNE MAY - JUNE 2016

Increased electronic payment usage added $70 million (Sh7.1 billion) to Kenya’s GDP
from 2011 to 2015, according to the report.
Kenya’s GDP elasticity in regard to card
penetration is estimated at 0.0047 per cent
meaning that a one per cent increase in card
usage caused a less than one per cent increase in GDP.
This elasticity has grown from 0.0041
per cent to 0.0052 per cent, reflecting an increased uptake of e-payment systems.
The research also estimated that higher
card usage contributed an additional USD
296 billion to consumption between 2011
and 2015 a 0.1 per cent cumulative increase
in global GDP during the sample time period.
That equals about a USD 74 billion contribution to GDP each year.
Real consumption grew at an average of
2.3 per cent in the same period, of which
0.01 percentage point is attributed to increased card penetration.
The report also found that the electrification of payments benefited governments