Loan defaulters boot SIM cards as mobile money deposits hit Kshs. 1.2T

The number of mobile money subscribers declined 0.2% in the first three months of the year to September in what Communications Authority (CA) attributes to loan defaults.

According to first-quarter data from CA, the number of mobile money subscribers declined to 34.6 million from 34.7 million during the fourth quarter of the last financial year ending June.

“As at the end of the period under review, the number of active mobile money subscriptions dropped by 0.2% to stand at 34.59 million subscriptions. This is attributed to the increase in the number of mobile loan defaulters whose SIM cards remained inactive during the reference period,” said CA.

The rise of digital loans has led to an exponential rise in digital lending where consumers are often required to give their mobile numbers to access the loans which are sometimes deposited directly in their mobile money accounts.

During the period under review, the total value of mobile money deposits grew 16% to Kshs. 1.2 trillion from Kshs. 1 trillion reported during the previous quarter.

On the other hand, the value of customer-to-business transfers increased from Kshs. 988 billion to Kshs. 1.2 trillion, a 21.1% increase while the value of person-to-person transfers increased 8.8% to reach Kshs. 912 billion.

“The COVID-19 pandemic has encouraged more consumers to adopt mobile money in purchasing essential goods and services. Consequently, there has been a general uptick in merchant payments and deposits, and the period under review was no exception,” CA stated.

The value of Government to Citizens transfers dropped by 29.4% due to a reduction in COVID-19 fund disbursements by the Government according to the authority.

The data shows that most subscribers decreased their spending and increased their borrowing, especially on mobile loan platforms.

The number of active SIM cards subscribed to mobile data/Internet services also declined by 2.4% to record 44.88 million subscriptions.

Mobile broadband subscriptions grew 0.53% to 26.9 million, which implies that there was increased demand and uptake of higher Internet speeds by a majority of mobile data/Internet users.

CA says in spite of the disruption and challenges caused by the Covid pandemic, there has been a widespread shift in the uptake of digital tools and services as more Kenyans adopt mobile and Internet services out of necessity.

During the period, the number of on-net and off-net messages declined by 24.3% and 21.8% respectively while the voice on net voice traffic grew 51% due to promotions by mobile network operators.