Usage of electronic payments added Sh7 billion ($70 million) to Kenya’s GDP from 2011 to 2015, a new report shows.
The report commissioned by payments technology firm Visa Inc. says increased use of electronic cards such as credit, debit and prepaid cards, created the equivalent of an average of 5,330 jobs in Kenya per year between 2011 and 2015.
The study titled "The Impact of Electronic Payments on Economic Growth" was conducted by Moody’s Analytics.
“These findings reinforce the many positive benefits that electronic payments bring to local economies all over the world,” said Visa Inc. Chief Executive Officer Charlie Scharf of the findings released on Thursday.
The study sought to analyse the impact of electronic payments on economic growth across 70 countries between 2011 and 2015.
Cumulatively, it found that countries that increased use of electronic payment products added Sh29.6 trillion ($296 billion) to GDP, while raising household consumption of goods and services by an average of 0.18 per cent per year.
MILLIONS OF NEW JOBS
In addition, Moody’s economists estimate that the equivalent to 2.6 million new jobs were created on average per year over the five-year period as a result of increased use of electronic payments.
The 70 countries that were studied make up almost 95 per cent of global GDP.
“Electronic payments are a major contributor to consumption, increased production, economic growth and employment creation.
Those countries which saw large increases in card usage also saw larger contributions to overall growth in their economies,” said Moody’s Analytics Chief Economist Mark Zandi.
The report also found that the electronification of payments benefited governments and contributed to a more stable and open business environment.
It says electronic payments helped to minimise what is commonly referred to as the grey economy – economic activity that is often cash-based and goes unreported.
“As a result, electronic payments provided a higher potential tax revenue base for governments, while also bringing the added benefits of lower cash handling costs, guaranteed payment to merchants and greater financial inclusion for consumers,” says the study.
Many African countries are in the early stages of developing their financial systems with appropriate infrastructure to support electronic payments.
The study notes that in the coming years, the increase in the use of mobile phone technologies to make payments is expected to increase electronic payments penetration.