Study finds a cashless Nairobi would benefit everyone

0

Cash may be the end goal of every entrepreneur in Kenya. But many times, when handling it, one has to contend with some headache. Two common problems standout in Nairobi:

The first is insecurity, which hinders potential of entrepreneurs by forcing businesses to close early. Of course it’s a problem of the security apparatus. At the same time, the crooks are attracted by the wards of cash collected at every business day. You’re never sure who is waiting on you as you move to deposit it elsewhere.

Secondly, there is the problem of getting ‘change‘ if you serve the final consumer (in retail, services) or are involved in a business with a short cash cycle – perhaps you are a supplier to a number of micro and small enterprises.

This is a problem because of the cost you have to incur in time, effort and money to have adequate ‘change‘. Unlike a supermarket, you probably can’t get away with giving candy in place of money. A study has quantified how much more it costs to deal with cash instead of going cashless.

READ: HOW KENYA CAN GET RID OF CHINESE FISH IMPORTS THAT THREATENS OUR FISH SECTOR

Cashless Cities: Realizing the Benefits of Digital Payments‘ by Roubini ThoughtLab also revealed that cities could boost their GDPs by 3% by increasing adoption of digital payments. Nairobi was one of these cities assessed by the study.

This city was described as having moderate adoption readiness. Perhaps this is because the benefits are not considered to be as broad – because of moderate adoption. It’s a feedback loop. One writer argues that cashless in Nairobi means less liquidity, among other problems. This is obviously bad news for small businesses which are focused on day-to-day operations.

But the study by Roubini ThoughtLabs gives a list of 61 recommendations that would improve the experience of digital payments. Many of which can be implemented in Nairobi. The County Government has been on record about going cashless to reduce administrative costs and instances of bribery.

Two that captured my attention are the need to initiate financially literacy programs to bring the unbanked into formal finance. Kenya has done a good job at this with mobile payment but there’s still some work to be done.

READ: MOBILE SOLUTIONS TO COMMON PROBLEMS FACED BY WOMEN ENTREPRENEURS

The ‘Cashless Cities: Realizing the Benefits of Digital Payments‘ study also encourages Governments and private players to invest in improved infrastructure for digital payments to take off.

Head of Roubini ThoughtLab, Lou Celi said, “without a firm foundation on electronic payment, cities will not be able to fully capture their digital future.”

About the study

3000 consumers and 900 businesses were surveyed across 6 cities. Findings from these were extrapolated to a further 94 cities based on specific demographic and economic data. The study was commissioned by Visa.

Read the full report here

1
Share.

About Author

Web Content Writer, equipping you with resources and knowledge to launch and grow your business. You can reach me you know: malitrobert@gmail.com

Comments are closed.