There have been a number of significant developments in the financial sector in Kenya in the first two months of 2022, and our Media TEAM took time to assemble some of these key happenings in the industry, for your benefit and enrichment.

CBK invites debate on digital currency

In Mid-February, major newspapers including the Business Daily, The East African, the Daily Nation as well as the Kenyan Wall Street, reported that the Central Bank of Kenya had invited the public for the first time to submit their views on the introduction of a central bank digital currency (CDBC), a virtual version of the Kenyan shilling, as it seeks to keep pace with global financial innovations.

The CBK released a lengthy discussion paper that will serve as the basis of what is expected to be a landmark debate — though it maintained that the risks surrounding digital currencies remain at this point. The paper said the CBDC would be “a sovereign currency in an electronic form and it would appear as a liability on CBK’s balance sheet and an asset to users holding it.

Kenyans were given 120 days to submit their views that will form part of considerations to create a CBK-backed digital currency. CBDC is a national fiat currency in digital form. This means that besides the printed cash, CBK will also issue the electronic equivalent. Kenya can make a significant saving in the cost of printing currency with the adoption of a virtual shilling, CBK said ahead of the public debate over the proposed rollout of its digital currency.

Mobile banking uptake increases to 58 percent

Further afield, the Business Daily reported on February 18, 2022 that Six in 10 bank customers prefer mobile banking compared to other forms of accessing bank services, underlining the growing popularity of the convenient and automated platforms.

A customer satisfaction survey by Kenya Bankers Association (KBA) found that mobile banking was the most preferred channel in 2021 at 58.4 percent, up from 52 percent the year before.

Mobile banking is primarily offered through USSD codes, using basic mobile phone technology to offer financial services to customers without the internet.

The bankers’ lobby said the uptake has grown rapidly in the Covid-19 pandemic era as banks invested more in the platforms to reach customers who in turn sought to reduce contact-based interactions.

“The increase may be attributed to the challenges introduced by the pandemic and its containment measures which have entrenched the use of contactless banking services,” KBA said in a statement.

The use of mobile banking has also been incentivized by reduction or removal of charges on the services as directed by the Central Bank of Kenya as part of the regulator’s efforts to boost uptake of cashless transactions.

StanChart launches Sh1,000 online money market fund

In other news, the Business Daily reported that Standard Chartered Bank Kenya had entered the money market fund business, allowing customers to make investments of as low as Sh1,000.

The bank, which has been keen to grow its wealth management business, is offering the investment service through its digital platform SC Mobile app.

StanChart did not indicate the returns investors should expect in the local currency fund but said they will be competitive.

Most money market funds have an effective annual return of between eight and 10 percent before fees and taxes.

“The SC Shilingi Fund will enable all our existing and new clients achieve their financial goals by starting their investment journey, diversifying their portfolios and saving towards future needs while earning attractive returns,” Edith Chumba, the head of consumer, private and business banking at StanChart said.

Mauritius Holdings Acquires 73% Stake in Key Microfinance Bank

Elsewhere, the Kenyan Wall Street reported on February 9, 2022, that Mauritius Holdings Limited (LOLC Mauritius) had acquired a 73% stake in Key Microfinance Bank (Key MFB) by Mauritius firm, as was reported in a bulletin from the Central Bank of Kenya (CBK), effective January 1st, 2022.

This follows CBK’s approval on December 22, 2021, under Section 19 (4) of the Microfinance Act and approval by the Cabinet Secretary for the National Treasury and Planning on January 7, 2022, pursuant to Section 19(3)(b) of the Microfinance Act.

LOLC Mauritius is a private company incorporated in Mauritius that is wholly owned by LOLC Holdings PLC.

Bank ATM Visits Decline by 9.8% as Mobile Banking Continues to Reign -KBA

The Kenyan Wall Street further reported that the number of bank customers who prefer to visit bank ATMs to access cash has continued to dip as more banks move towards digitization.

According to the Banking Industry Customer Satisfaction Survey 2021, customers who preferred the use of ATMs dropped to 9.8 per cent last year compared to 12 per cent in 2020.

The survey done by the Kenya Bankers Association (KBA) further noted that 58.4 per cent of those surveyed prefer mobile banking while those who prefer Internet/Online Banking stand at 20.3 percent.

The Kenyan Wall Street had earlier on in the month reported that Mobile money transactions in Kenya grew by 32% in 2021, according to data from the Central Bank of Kenya.

This growth in mobile money use was attributed to an increase in the use of cashless transactions by firms and households.

CBK data shows that Safaricom’s M-Pesa, Airtel Money and Telkom’s T-Kash agents handled KSh6.8 trillion in the twelve months to December 2021, a 31.7 percent jump from KSh5.2 trillion in 2020.

DTB Partners with Tata Africa to Offer SMEs Vehicle Financing

In late January, the Kenya Wall Street reported that Diamond Trust Bank (DTB) had partnered with Tata Africa to offer 100% financing which will enable small and medium sized enterprises (SMEs) acquire vehicles from Tata Africa.

Through the scheme, dubbed ‘Beba Leo’, the SMEs will be financed to acquire Tata and Daewoo vehicles with a flexible repayment period of up to 60 months.

Kamal Rohira, Auto Business Head at Tata Africa Holdings (K) Ltd said the partnership targets individuals, SMEs and large commercial businesses for easy and attractive loans of up to 100% of the vehicle cost. He further added that Tata has an active population of more than 15,000 commercial vehicles in the country, which is served by 11 service stations and 23-part retailers.

CBK Grants Cellulant a Payment Service Authorization

It was further reported by mainstream media sources that the Central Bank of Kenya had granted Cellulant a Payment Service Provider Authorization, enabling the fintech company to expand its payments offering for businesses, banks, and consumers.

The authorization permits Cellulant to continue enabling businesses to collect payments online and offline while allowing anyone to pay from their mobile money, local and international cards or directly from their bank.

Cellulant, a leading payments company in Africa, has partnerships with 45 of the largest mobile money operators and 210 banks across Africa and has a converged payments ecosystem that brings together a network of banks, businesses, mobile network operators and consumers.

The company provides its services in 35 countries across Africa, including Ghana, Botswana, Nigeria, Kenya, Cameroon, Uganda, Tanzania, Zambia, Egypt, Ethiopia and South Africa, offering the largest and most connected payments network on the continent.

GTBank Kenya Secures $15 Million Facility from IFC to support SMEs

In other news making headlines in January, IFC announced it had extended a $15 million loan to Guaranty Trust Bank (Kenya) Ltd, a subsidiary of the Guaranty Trust Group, for lending to local businesses in the country.

GTBank Kenya said it will provide access to finance mainly to small and medium-sized enterprises (SMEs) in the trade, consumer goods, pharmaceuticals, and manufacturing sectors, among others, helping them retain and create jobs, and strengthen their operations.

In a statement, IFC said the facility is designed to support its existing IFC clients in emerging markets affected by the economic fallout from COVID-19.