Cheque payments recover from second quarter fall after economy reopening

Habil Olaka. FILE PHOTO | NMG

By CONSTANT MUNDA
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Summary

• Latest statistics by Central Bank of Kenya (CBK) show deals amounting to Sh573.14 billion were cut via cheques in the July-September 2020 period, a growth of 16.45 percent over the previous quarter when stricter Covid restrictions were in place.
• Despite Sh80.98 billion quarter-on-quarter growth, cheque payments in the third quarter were 15.5 percent thinner than Sh661.95 billion in a similar period in 2019, and the lowest in eight years.

Bank payments made through cheques for the third quarter recovered from a 10-year low in the previous period on gradual reopening of the economy which lifted economic activity in corporate Kenya.

Latest statistics by Central Bank of Kenya (CBK) show deals amounting to Sh573.14 billion were cut via cheques in the July-September 2020 period, a growth of 16.45 percent over the previous quarter when stricter Covid restrictions were in place.

Despite Sh80.98 billion quarter-on-quarter growth, cheque payments in the third quarter were 15.5 percent thinner than Sh661.95 billion in a similar period in 2019, and the lowest in eight years.

The volume of cheques cleared at the Automated Clearing House under the Kenya Bankers Association (KBA) was slightly more than 3.62 million, a 17.75 percent rise from nearly 3.1 million in April-June period.

Transactions in cheques had dropped to a 10-year low of Sh154.56 billion in May at a time public health and financial services authorities encouraged businesses and homes to cashless payments such as mobile money to stem the spread of global coronavirus pandemic.

The value of transactions, which are restricted to payments below Sh1 million, started growing on gradual easing of Covid containment measures in June when the payments stood at Sh181.41 billion.

They edged up further to Sh188.53 billion in July, Sh187 billion in August before touching Sh197.6 billion — the highest since most firms started working remotely with employees working from home.

Kenya Bankers Association chief executive Habil Olaka said in July interview that banks and customers had in the second quarter embraced digital payment platforms such as PesaLink — an interbank mobile payment channel which allows a maximum payment of Sh999,999 —to stem the spread of the global coronavirus pandemic.

“This (Covid-19) pandemic-driven disruption …may cause a shift in terms of payment transactions preference towards mobile and online platforms,” head of financial services and risk advisory at EY East Africa Robert Nyamu told the Business Daily in August.

Transactions through mobile phones and tablets amounted to Sh3.55 trillion in the first nine months of the year from Sh3.24 trillion a year earlier.