Subsidies unveiled by the government last year to cushion Kenyans from the effects of the corona virus have already started showing their impact on businesses in the financial sector. As a way to encourage cashless transactions, the government through the CBK removed fees on mobile money transactions to and from bank accounts. As a result, these guidelines have cost Kenya’s biggest financial institution at least a few billion Kenyan Shillings.
Data released from KCB’s financial results indicate the lender took a hit of at least 2.16 billion shillings occasioned by waiver on mobile money transaction fees during the peak of the pandemic period last year. The Central Bank of Kenya issued several guidelines in an effort to curb the spread of the virus including zero-rating transaction fees on certain amounts. The move was aimed at discouraging cash handling, an activity that was deemed to be at the core of the virus spread in the country.
KCB disclosed that revenues from mobile banking dropped by 22 percent to Ksh. 7.71 billion, a figure that came short due to lack of revenue from fees charged on moving money between mobile money wallets such as from bank to MPESA and vice versa. After the Covid-19 was reported in Kenya, and the country entered int a lockdown that saw schools, business and many other organizations close down for the duration.
The financial institution gets its revenues from various transactions such as withdrawals, deposits, as well as loan applications. There was a decline in profits even though, overall mobile transactions rose by 75.6 percent from Ksh. 616 billion to Ksh. 1.08 trillion. These numbers were encouraged by lack of transaction fees as advised by the government.