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Kenya’s digital transformation journey

Summary:
Dr. Patrick Njoroge, Governor, Central Bank of Kenya in this speech: Digitalization, the theme I have been asked to focus on, has seen us through this difficult period. In the context of the COVID-19 containment measures—and particularly movement restrictions and curfews—digital platforms have enabled our citizens to access financial, health, education and medical services, entertainment, and shop online. In Kenya, the digital rails built over the last fifteen years have been a saving grace as we have battled COVID-19. The starting point of Kenya’s digital rails in March 2007 was in using mobile phones to serve a need to transfer money from urban workers back to their families in the rural areas. These P2P transfers were supported by a network of agents who facilitated cash

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Dr. Patrick Njoroge, Governor, Central Bank of Kenya in this speech:

Digitalization, the theme I have been asked to focus on, has seen us through this difficult period. In the context of the COVID-19 containment measures—and particularly movement restrictions and curfews—digital platforms have enabled our citizens to access financial, health, education and medical services, entertainment, and shop online. In Kenya, the digital rails built over the last fifteen years have been a saving grace as we have battled COVID-19.

The starting point of Kenya’s digital rails in March 2007 was in using mobile phones to serve a need to transfer money from urban workers back to their families in the rural areas. These P2P transfers were supported by a network of agents who facilitated cash withdrawals and cashing in. Shortly thereafter, Kenya’s long-term development plan, Vision 2030, was rolled out in 2008 with the overarching objective of improving the livelihood of all Kenyans through shared prosperity. Financial services were identified as a key enabler, but requiring a dramatic transformation as only 26 percent of adult Kenyans could access the formal financial system in 2006.

This transformative imperative supported the growth of mobile phone financial services from payments to an elaborate ecosystem that includes other financial services such as savings, credit, insurance, pensions and capital markets. At the same time, the percentage of Kenyans accessing financial services had tripled from 26 percent in 2006 to 82 percent in 2019. Pushing further ahead, our vision is the democratization of financial services, which customers can access anytime anywhere.

Three pillars of Kenya’s digital push:

  • First, it is not about the technology but the problem at hand. Focus on needs of people and how can tech serve that need.  
  • Second, it takes collaboration to build an ecosystem.
  • Third, is our regulatory philosophy towards innovation which focuses on testing and learning long before sandboxes came into being. 

Perhaps a more interesting story is how M-Pesa was digitising transactions while the State was sleeping.

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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