Kenya
Figure 6.2
169
Remittance Instruments Used by RSPs electronic funds transfers
54%
checks
51%
account-to-account transfers
35%
bank drafts
35%
money transfers by cell phone
19%
others money orders prepaid debit cards
16% 11% 8%
Source: RSP Survey data. Note: The percentages indicate responding RSPs that use each instrument.
financial and nonfinancial institutions under review. Because the central bank must clear all money sent by EFT and clears the local transfers only twice a day (at 10 a.m. and noon), the transfers are not instantaneous, as they are through M-PESA. In addition, in Kenya, 34 banks are members of the SWIFT network. The central bank encourages banks to join SWIFT because of its robust network. Checks. Checks are offered by 51 percent of the RSPs. In Kenya, checks are cleared between one and three days after the transaction in most parts of the country, depending on the value of the check. Checks from remote centers are typically cleared in 10 days as opposed to immediate (realtime) settlement. On a gross-basis principle through a Real Time Gross Settlement (RTGS) system, transfers would be effected within 30 minutes (the transfer is done almost immediately), with clearing done at the central bank on the same day. However, a major shortcoming in the current Kenyan payment system is the lack of a real-time interbank exchange. Furthermore, anti-money-laundering legislation has not yet been passed to facilitate dealing with cases of checks that bounce. Bank drafts. One of the major constraints in using bank drafts is that they are expensive—with charges of K Sh 100–K Sh 600 (US$1.40–US$8.60)— and are not cleared instantaneously. Each bank charges a fixed amount regardless of the amount sent. Transfers by bank draft also require that the receiver have a bank account where the draft is deposited.