Kenya is among Sub-Saharan countries that lead the world’s emerging markets in electronic payment regulation.
According to The Economist’s 2014 Global Microscope Index and Report (GMI), Kenya’s electronic payment regulations posted 88 per cent score out of 100 per cent to emerge second after Tanzania, which scored 89 per cent.
The GMI assesses the regulatory environment for financial inclusion in 55 emerging economies across 12 indicators (scored out of 100). In the study, six of the top 20 economies on the GMI are from Sub-Saharan Africa and include Tanzania, Kenya and Rwanda.
Four of the 10 leading countries in this sub-index are from SSA and are led by Rwanda (100) and Tanzania (100), which are tied in first place globally.
SSA also has strong regulatory and supervisory capacity for Financial Inclusion with four SSA countries in the top 10 list, including Kenya (89) and Tanzania (89) in a third-place tie.
Lipa na M-Pesa
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The region ties with Central Europe and East Asia as having the world’s best electronic payments and mobile money regulations. The three economies outperformed Brazil and China in financial inclusion. Regionally SSA ranks third with an average GMI score of 44, which is higher than the Middle East and North Africa (30) and Eastern Europe and Central Asia (43).
The government with the support of innovations spearheaded by the private sector has for example embarked on a cashless payment system in the country. For example, government procurement payment system is through electronic system, which wants to curb corruption and improve efficiency in the whole chain. Some of the popular electronic payment system, supported by the mobile operators includes Lipa na M-Pesa, a brain child of leading operator Safaricom.
Credit cards are on the rise in the country with many using them to do shopping in supermarkets and pay for items in the hospitality industry through the Safaricom’s Pay Bill and Buy Goods platforms.
In the report, government support for Financial Inclusion is one of the 12 sub-indices for the GMI identified. Currently, Kenya’s public service vehicles are encouraged to adopt the cashless payment system, a development which will further put the economy on a global platform on its efforts to adopt electronic payment system. This, in turn, will also demand for an improved regulatory environment.