Kenya at the tipping Point?

Transcription

1 Kenya at the tipping Point? with a special focus on the ICT revolution and Mobile Money World Bank Economic Team Presentation by Jane Kiringai Nairobi December 2, 2010

2 Main messages 1 2 Kenya may now be at a tipping point for robust growth Economic recovery has gained momentum and growth is now broad based There is a positive momentum created by 5 factors: (i) New constitution; (ii) EAC integration; (iii) ICT innovations; (iv) Continued strong macro management; (v) Recent investments in infrastructure World Bank is revising its growth forecast upwards to: - 4.9% for 2010; and - 5.3% for 2011, even higher if no shocks occur 3 Kenya has experienced a Telecom revolution in the last decade In , telecoms grew by 20% on average Without telecoms, Kenya s average growth would have dropped from 3.7% to 2.8% 4 Mobile money has become a game changer for the economy World Bank estimates that by end 2010: - 15 million Kenyans will use mobile money; and - Mobile money transfers will equal US$ 7 billion annually (or 20% of GDP)

3 Recent Economic Developments and Outlook for 2011

4 Percent Kenya s economic recovery has gained momentum and is now higher than average for SSA GDP Kenya GDP SSA Percapita Kenya Percapita SSA

5 Ethopia Tanzania Uganda Rwanda Kenya Ghana SSA average South Africa GDP growth % and catching up with growth in East Africa 8 7 Economic Growth

6 percent Percent Growth is now broad based, by sector and by quarter 10.0 Growth rate 6.0 Growth rate Agriculture(25.5) Industry(18.8) Service(55.7) (1.0) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q

7 Jan Mar May July Sept. Nov. Jan Mar May July Sept. Nov. Jan Mar May July Sept. Nov. Jan Mar May July Sept. Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Macroeconomic management has been strong: inflation is low and the real exchange rate stable Overall inflation Food inflation Effective Exchange rate (Jan 2003=100) Nominal Real

8 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May July Sep Nov Jan Mar May July US$ millions The Balance of payments is in surplus allowing CBK to accumulate reserves Months of import cover Official reserves Overall balance

9 Deficit % of GDP Financing Budget deficit has increased as government spends to stimulate the economy 8 Deficit financing Deficit Foreign Domestic Privatization

10 The World Bank projects a 5.3% growth in 2011 Barring any shocks, the growth could even reach 6.0% Base case Low case High case

11 Special focus The ICT revolution and mobile money

12 Growth in the telecoms sector averaged 20%... Annual average growth by sector Post and telecommunications Hotels and restaurants Construction Transport and storage Wholesale and retail trade, repairs Water supply Health and social work Farming of animals Manufacture of food, beverages and tobacco Mining and quarrying Real estate, renting and business services Compared to 3.7 % average for all sectors All other manufacturing Other community, social and personal services Education Electricity supply Private households with employed persons Growing of crops and horticulture Financial intermediation Forestry and logging Fishing Agricultural and animal husbandry services -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

13 Mobile telephone growth has been exponential and average tariffs have declined Millions 25 Mobile phone users and average call tariffs kshs/min / / / / /09 mobile phone subscribers ave tariff khs/min 0

14 Kenya s ICT revolution continues: 21 million phone connections, 8 million internet connections

15 putting Kenya among top performers in the region Mobile phone subscriptions per 100 adults (Age 15+) South Africa Ghana Kenya Nigeria Tanzania Uganda Ethiopia

16 The Impact of Mobile Money

17 % of GDP Mobile money transfers continue to grow and could exceed 20 percent of GDP at the end of % 20% 15% Monthly Value of Person-to-Person Transfers as % of GDP Trend with Forecast 10% 5% 0%

18 Mobile money has contributed significantly in deepening Kenya s financial access pyramid Banks Mobile phones only Adults with access to finance Banks No access to finance or phones Adults without access to finance Mobile money only Mobile phones only No access to finance or phones June 2006 March 2010 Total population: 36.6 million 39.4 million Population 15yrs +: 20.9 million 23.1 million Banks also include other financial institutions

19 Usage rates are higher in Central and West of Kenya 73% of men and 64% women will use M-money in 2010 Adults using mobile money by province Percent Adults using mobile money by gender Percent Men Women

20 Mobile money usage trails mobile phone ownership in Coast and Eastern provinces Nairobi Central Coast Rift Valley Eastern Nyanza Western North Eastern % Mobile -money (individuals)

21 Nairobi accounts for the largest share of mobile money flows but the fastest growth is in remote regions Province Total Monthly Mobile Money Transfers (Shares by Province) Growth (Apr Aug 2010) Nairobi 35.8% 118% Rift Valley 16.5% 104% Central 12.3% 127% Eastern 10.4% 126% Nyanza 9.4% 123% Coast 8.6% 121% Western North Eastern 1.7% 5.2% 119% 142%

22 percent Mobile money usage is highest among the younger but 45% of those above 50 years use it as well Jul-Aug 2009 Dec 2010 (Projections) Age groups

23 percent The rich use mobile money disproportionately but poorer Kenyans are catching up Jan-Mar 09 Aug-Sep '09 Dec 2010 (Projections) Poorest 2nd poorest Middle 2nd wealthiest Wealthiest Quintiles of wealth index

24 Within only 3 years, mobile money has replaced traditional means of remitting funds Other Cheque Direct into bank Western Union, etc. Post office Bus/matatu Friend/family Mobile money transfer 0% 10% 20% 30% 40% 50% 60% 70%

25 Conclusion If reforms and liberalization are well designed, they generate a net gain in jobs not a net loss. Regulation should have rules tight enough to protect users and to discourage fraud, but loose and open enough to encourage innovation and the development of new services Kenya can be a major exporter of global innovations

26 Thank You Thank You For more information on this report and the World Bank s Economic Program in Kenya, please contact: Jane Kiringai: jkiringai@worldbank.org ;Wolfgang Fengler: wfengler@worldbank.org ; or, Gabriel Demombynes: gdemombynes@worldbank.org