Telcos are expected to enjoy a windfall from the self-service and payment portal e-Citizen after the government expanded the number of services accessed through the platform.
The State’s move to gazette pay bill number 222222 as the single payment platform and expanding services paid for through this platform, has lifted the stature of pay bill transactions in the economy.
E-Citizen management this month indicated that collections through the system currently average Sh350 million daily, up from Sh50 million in the year that ended June 2023—a sign of the volume of transactional funds processed via the system.
Over 19,000 public services across all government institutions are currently available on e-Citizen, out of which 15,440 have been fully on-boarded while more would be added soon.
The bigger shift to cashless payment for government services is expected to yield new business for telco’s mobile money platforms since they facilitate these transactions at a fee.
Safaricom, which in 2015 partnered with the government to automate payment of State services through the e-citizen platform, is set to enjoy even more, having already reaped from a first-mover advantage when it comes to payments for e-Citizen services.
The e-Citizen is a platform that allows Kenyans to access government services such as the renewal of driving licenses, application of passports, and business registration services at a fee.
The Communications Authority of Kenya (CA) puts mobile money subscriptions at 38.06 million at the end of September, translating to a penetration rate of 75.2 per cent. The subscriptions are supported by 338,209 agents.
The authority data showed M-Pesa was commanding 97.1 per cent of the 38 million mobile money subscriptions as at end of June last year, followed by Airtel Money with two per cent and T-Kash with 0.1 per cent.
M-Pesa’s leading market share promises to make it the outright beneficiary of the government’s push for more services to be paid through paybill.
Government entities including Kenya Revenue Authority, Kenyatta National Hospital, and National Hospital Insurance Fund have all made the switch to this single paybill platform that is now used in paying for more than 16,000 services that have been digitised.
Safaricom currently charges between Sh5 and Sh101 as fees to facilitate paybill transactions, depending on the amount involved.
President William Ruto said the directive was meant to ensure that the Treasury can “have sight of every government service that is paid for.” The directive has also seen services not traditionally paid for digitally go through the pay bill number.
“We have close to over 1,000 pay bills some of which we don't have sight of. They must now be closed," said the President on the directive.
The move promises to accelerate the growth of paybill business for telcos. Central Bank of Kenya (CBK) data shows there were over 77 million registered mobile money accounts at the end of December 2023, making them all eligible candidates for paybill transactions.
Customers already see pay bill payments as an easy-to-use channel when paying for other services such as bus fare and shopping. This is expected to be replicated in payments for government services.
Parents, including those who have been paying school fees in kind, are now being forced to convert this into money and pay through the pay bill. Students of public universities also have to pay school fees and meals via this number, presenting a new business for telcos.
Chief of staff and head of public service Felix Koskei last November said 250 ministries, departments, and agencies had fully onboarded the e-Citizen platform, offering over 16,000 government services, up from 397 in June 2022.
Mr Koskei said the increased number of services on e-Citizen, most being paid for via mobile money, were generating Sh281 million in daily revenue for the government. The figures offer a sneak peek into the amount of money against which telcos charge service fees.
Mobile money has over the years grown to be a lucrative revenue stream for telcos as customers use them to send cash, pay for goods and services, and take short-term credit.
Use of paybill for government services has, however, come with concerns over the tedious process of resolving transactions that deduct money but fail to reflect in the system or the cases where those transacting send money to wrong pay bill numbers.
The downturn of mobile money platforms such as M-Pesa is also a concern. Treasury said recently it has been in touch with Safaricom over the recent downturns “to see how they can be alleviated.”
“We are in very close touch with Safaricom because of course we recognise the risk to the economy of these outages and this is an area of concern,” said Kamau Thugge said during a recent post-Monetary Policy Committee meeting.
