By: JAMES KARIUKI
The adoption of paperless cash transactions in the matatu and retail sectors could further increase foreign direct investments in Kenya.
In an analysis done by Frost & Sullivan dubbed ‘The Telecommunications Market in East Africa – Key Fixed and Mobile Market Indicators’ the mobile communications market in East Africa grew steadily at 11 per cent during the 2013-2014 period.
The study notes that mobile-based cashless services providers should take advantage of the conducive policy framework in their respective countries to entrench e-commerce services into the tourism, retail and matatu sectors.
This would lead to the creation of new revenue streams for their agents, enhancing safety and security in handling of cash reserves.
USE OF 4G NETWORK
According to the study, online trading through smart devices and machine-to-machine (M2M) gadgets at payment tills in supermarkets, restaurants, petrol stations, among other pay points, will push the use of 3G and 4G and surpass the 2G network in the next three years.
Frost & Sullivan’s Digital Transformation Research Analyst, Ms Deepti Dhinakaran, said that Internet services in Kenya should be devolved to the counties through the national broadband rollout as this would facilitate paperless cash transactions putting the country at par with first world countries.
“Alliances forged between banks and mobile phone operators to deliver airtime top-ups and remittances, payment of utility bills among others in Kenya have redefined telecommunications business models,” noted Ms Dhinakaran.
Successful payments made through mobile-based cash accounts from handsets coupled with low fees charged by operators has helped Kenyans embrace the service forcing mobile phone companies to expand their market to neighbouring countries.
Operators are venturing into mobile financial services and infrastructure leasing to remain competitive and relevant, encouraging the transition to more advanced telecommunications services and paving the way for a truly connected East Africa.
“The republics of South Sudan, Sudan and Somalia have shown promising markets but instability in these countries have greatly hindered development of e-commerce based on the cashless mobile phone-based payments and cash transfers that are secure and safe,” the report says.
The firm urges these countries to rope in private investments to speed up the launch of Internet-based banking services as well as cash transactions.
With a telecom penetration rate of 205.4 per cent, Seychelles was ranked as the most developed telecommunications markets in East Africa.
Kenya and the Republic of Sudan rounded off the top three countries in terms of telecommunications penetration rates at 74.2 and 69.9 per cent respectively.
The findings also reveal that that geographical location was not a barrier to telecommunications development with the land-locked countries of Rwanda and Uganda undergoing rapid development in the sector.
SOURCE: DAILY NATION