Cash handled through mobile money agents across the country dropped sharply in the nine months to September, marking the steepest fall since M-Pesa was launched in 2007.
New data from the Central Bank of Kenya shows a Sh344.9 billion decline in the value of transactions processed by agents, pointing to rising pressure on households and businesses during a period of strained incomes and slow job growth.
According to the data, mobile money agents processed Sh6.2 trillion between January and September, down from Sh6.5 trillion in a similar period last year. The fall came at a time when Kenyans were struggling with reduced disposable income caused by higher payroll deductions and fewer job opportunities in key sectors.
While the Stanbic Kenya Purchasing Managers Index stayed above the 50-point mark for six out of the nine months, showing some improvement in private sector activity, many companies kept wages unchanged and froze hiring, leaving consumers with less to spend.
Inflation also continued to weaken the real value of salaries, further lowering the amount of cash circulating in the economy.
The situation worsened as unpaid bills owed to government contractors and suppliers climbed to Sh524.8 billion by June, cutting off another major source of liquidity for businesses.
This was only the second time the country has seen a contraction in the value of mobile money handled by agents since the CBK began keeping the records, after a smaller drop recorded last year.
Despite the lower value, activity at the agent level rose. CBK figures show that customers made 1.91 billion transactions in the period, a 2.7 percent increase from the previous year.
This shift points to a growing preference for smaller transfers, with customers avoiding large cash movements that come with higher charges or require agents to hold more liquidity.
Many users have been splitting payments into several low-value transfers to better manage daily spending. Others are moving funds directly between bank accounts and mobile wallets, bypassing agents altogether.
The number of active agents grew by 24.3 percent to 456,742, while registered mobile money accounts rose to 87.01 million, reflecting the continued expansion of digital financial services even amid reduced cash flow.
Safaricom alone expanded its nationwide agent network by 14.1 percent to 298,890 in the six months to September. But the overall decline in cash moving through agents is happening at a time when banks are holding unusually high cash reserves due to slow loan uptake and cautious lending.
Lenders have been growing deposits faster than loans, building up large liquidity buffers as businesses and individuals reduce borrowing. High loan defaults have also pushed banks to tighten credit, cutting the amount of new money flowing into the economy and lowering the bigger transactions that often end up in mobile money channels.
Agents are also seeing increasing competition from banking apps and mobile banking platforms that allow users to send money directly from bank accounts to mobile wallets.
These tools have reduced the need for customers to deposit or withdraw cash at agent outlets, especially those who deal with larger amounts. This marks a major shift from the early years of mobile money, when agents were central to most cash transactions and digital payments were still taking shape.
