How This African Country Became the World Leader of Mobile Money

Posted by on November 22, 2016 in Conscious Business, Conscious Living, Economy with 2 Comments


By Regan McNeil | The Plaid Zebra

Since we already use our phones as computers, it is not surprising that they could replace our wallets too. We will most likely get there one day, but as of now we’ve only evolved to the point of mobile banking through downloadable apps, while cards and cash remain the norm. But Kenyans are ahead of the game. They have embraced a system where currency can be exchanged through text messages using a simple service called M-PESA. Currently, Kenya is at the centre of the world’s innovation regarding the future of money.

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M-PESA literally stands for mobile money (the ‘M’ meaning mobile, while ‘Pesa’ means ‘money’ in Swahili). What may be surprising is that most Kenyans don’t actually use a bank, but eight out of 10  Kenyans have a cellphone. So what is the easiest and safest way to manage and exchange money in a bankless market? Using a cellphone. It doesn’t even have to be a Smartphone, just your barebones basic flip phone, or anything that can be used to send a message on.

So why did this service develop? The corporate answer is this: in 2006 a UK telecommunications group called Vodafone wanted to try out a mobile money transferring service in the unbanked market, so they chose to launch in through a company called Safaricom in Kenya. The other answer is that it developed out of necessity.

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Prior to the introduction of M-PESA, many Kenyans did not have a secure service to transfer or deposit money. As CBS News journalist Lesley Stahl expressed in a recent 60 Minutes broadcast, most Kenyans living in the city would send money to their families in rural parts of the country by giving a bundle of money to a bus driver travelling in that same direction. Once they arrived at the destination, the bus driver would give the money to someone who would be waiting at a specific spot. As you can imagine a lot of the money depleted before it even made it to its proper place and the system didn’t work very well.

The thing is in Kenya it does not make sense to have banks and M-PESA does not require them.  According to Stahl, most Kenyans make less than $2 a day. To purchase a cell phone and set up M-PESA, it costs about $30 American. There are so many M-PESA providers around the country that the service has almost become ubiquitous.

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M-PESA is better than the e-banking apps you may be familiar with. People can use their cellphones for almost anything including buying a purse in the market, paying for a taxi ride and believe it or not you can even buy cows with M-PESA. It is also used to regulate payments for things like communal water pumps and solar powered electricity. Normally it would takes days or weeks for people to pay these bills, now it can all be done through a few simple clicks on a phone.


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2 Reader Comments

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  1.' Willy Watson says:

    Umm spam emails maybe?

  2.' Anne Wamaitha says:

    My country Kenya leads..

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