top of page
  • Writer's pictureAndrew Kulankash

What to expect in payments: remittance space in Kenya

What better way to start the year than the news that diaspora remittances have crossed the Kes. 300 billion annual mark. Data from the Central Bank of Kenya indicate that 2020 was a buoyant year despite the global effects of the COVID-19 pandemic, registering a 10.7% growth to register $3.094 Billion (Kes 330 Billion). Despite a global drop projection of 14%, Kenya has registered growth which has been supported by financial innovations that provided Kenyans abroad convenient channels for their transactions.

This has not been the case for many countries, some Sub Saharan countries like Nigeria, have experienced a dramatic dip in remittances, analysts estimating up to 97% in the 9 months of 2020; attributed to the use of informal channels. Changing a greenback on Nigeria’s streets puts about a quarter more naira in the pockets of struggling households than what they will get at the official rate. It is worthy to note that there is extensive use and acceptability of cryptocurrency in the country making it more preferable to the FIAT currencies. The Central Bank of Nigeria has however implemented a few measures to bring this to control, from December 2020 all remittances into the country can only be made in USD.

Digital Channels

I must say the COVID-19 pandemic has brought its fair shares of positives and negatives in the cross-border payments and remittances space. We have seen the space morph from the use of traditional payment methods to a growing digital industry, a need that arose out of the closure of agents due to curfews and lockdown restrictions. We expect to see a lot more developments in this space as the ‘digital’ conversation has elicited a lot of interest and investments in digital financial solutions by the incumbent and new entrants in this industry.


The first news of the year was the commencement of trading on the first day of 2021 in the Africa Continental Free Trade Area (AfCFTA); the agreement will reduce tariffs among member countries and cover policy areas such as trade facilitation and services, as well as regulatory measures such as standards and technical barriers to trade. It is also estimated that intra-Africa trade will more than triple due to a better trading environment, this can only mean higher demand of financial solutions to transfer funds for payment of the trade, we expect to see a lot of partnerships between banks, MTOs, aggregators, telcos and fintech to address the need for larger fund transfers.

Adoption of Blockchain technology

The discussion on crypto-currency is no longer a far-fetched one, in the US a number of state governments are legislating on the matter and providing frameworks for the trading of digital assets. Recently, the President of the European Central Bank, Christine Lagarde intimated that they would be rolling out a digital currency in 4-5 years; China has also been working on a digital Yuan for some time now. If properly, cautiously and thoughtfully approached, and with a purpose to serve everyone (and not the digital savvy only) then there are lots of benefits to be reaped from blockchain and digital currency adoption. In countries like Nigeria, the adoption is faster and hence we expect to see a lot more countries following suit in 2021 and beyond.

Policy Improvement

The Central Bank of Kenya started the year by engaging stakeholders on its National Payment Strategy for the period 2021-2025. Some of the developments are geared towards open banking and electronic Know Your Customer(e-KYC) that will help the country become a digital, cash-lite and 24/7 economy, and not to forget, cementing its position in global leadership in digital and mobile money innovation. One of the proposals is to review the challenges of the current Regional Payment System and develop cross border payment solutions to promote regional trade.

Leveraging on remittances

We anticipate to see more leveraging of remittances to spur economic development in the country. Lack of income generating activities in a country causes migration which results in diaspora remittances if the remittances are leveraged it results in asset mobilization, income generation and job creation, if not then the vicious cycle continues. Donor funded projects such as the PRIME Africa initiative are keen on helping break this cycle; The Central Bank of Kenya has this year engaged actors in the remittances space in a diaspora remittance survey with the objective of boosting the role of remittances in supporting the economy and livelihoods. The Kenyan Citizenship and Immigration (amendment) bill if passed into law will create special incentives including wealth protection, voluntary savings schemes and the formation of associations by Kenyans in the diaspora.

Ultimately, there shall be growth supported by strategic partnerships and new business models aligning to new policy frameworks and technological development.

Andrew Kulankash, Partnerships and Projects Lead at Flex Money Transfer Limited

bottom of page