Kenya and South Africa are transitioning towards cashless economies, with Kenya expected to run out of cash machines in 28 years and South Africa in 32 years. Key drivers include digital payment systems, mobile money, and contactless transactions, influenced by high mobile penetration and rising financial literacy. Despite the progress, challenges such as financial exclusion remain significant.
Kenya and South Africa are at the forefront of transitioning to cashless economies, largely propelled by the increasing use of digital payment systems and mobile money. The convenience offered by contactless transactions is also a significant factor in this shift. According to estimates, Kenya is expected to deplete its cash machines in 28 years, while South Africa will follow in 32 years.
Kenya has emerged as a leader in digital payments in Africa, with factors such as high mobile phone penetration and a growing banked population contributing to this trend. The country has a notable track record, particularly since the launch of M-Pesa in 2007, which revolutionized mobile money services. Today, enhanced financial literacy continues to advance Kenya’s movement toward a cashless framework.
Conversely, South Africa is also making strides toward a less cash-dependent economy, aided by government initiatives encouraging electronic payments. Despite the persistent challenge of a considerable unbanked demographic, research shows that approximately 95% of South Africans have engaged in at least one digital transaction.
The global trend toward cashless societies is evidenced by the diminishing availability of ATMs; this shift is not confined to Africa. For instance, Norway is projected to become the first entirely cashless country within the next 11 years if current rates of ATM decline persist. A recent study by Merchant Machine, utilizing World Bank data, has revealed the anticipated timelines for various countries based on ATM reduction rates.
Nonetheless, the transition to a fully cashless system is fraught with challenges, including financial exclusion and potential service interruptions, which must be addressed to ensure a seamless experience for all citizens in these countries.
In conclusion, Kenya and South Africa are paving the way toward cashless economies facilitated by digital innovation and government policies. As cash machines become obsolete, consumer behavior is rapidly adapting, indicating a significant shift in payment methodologies. However, the journey to a completely cashless society requires overcoming obstacles such as financial exclusion and ensuring reliable service to support all stakeholders in the economy.
Original Source: africa.businessinsider.com
