(Economist) Why does Kenya lead the world in mobile money?

Paying for a taxi ride using your mobile phone is easier in Nairobi than it is in New York, thanks to Kenya’s world-leading mobile-money system, M-PESA. Launched in 2007 by Safaricom, the country’s largest mobile-network operator, it is now used by over 17m Kenyans, equivalent to more than two-thirds of the adult population; around 25% of the country’s gross national product flows through it. M-PESA lets people transfer cash using their phones, and is by far the most successful scheme of its type on earth. Why does Kenya lead the world in mobile money?

M-PESA was originally designed as a system to allow microfinance-loan repayments to be made by phone, reducing the costs associated with handling cash and thus making possible lower interest rates. But after pilot testing it was broadened to become a general money-transfer scheme. Once you have signed up, you pay money into the system by handing cash to one of Safaricom’s 40,000 agents (typically in a corner shop selling airtime), who credits the money to your M-PESA account. You withdraw money by visiting another agent, who checks that you have sufficient funds before debiting your account and handing over the cash. You can also transfer money to others using a menu on your phone. Cash can thus be sent one place to another more quickly, safely and easily than taking bundles of in person, or asking others to carry it for you. This is particularly useful in a country where many workers in cities send money back home to their families in rural villages. Electronic transfers save people time, freeing them to do other, more productive things instead.

Dozens of mobile-money systems have been launched, so why has Kenya’s been the most successful?

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Africa, Consumer/consumer spending, Corporations/Corporate Life, Economy, Kenya, Science & Technology

One comment on “(Economist) Why does Kenya lead the world in mobile money?

  1. HoraceinKenya says:

    One reason for its success that the author does not state is that customer service in most banks in Kenya is virtually nonexistent. Consequently, both senders and receivers find it incredibly handy, especially when there is an mpesa shop on nearly every corner. We’ve used it for our payroll for years, and we are about to start a farm marketing project where all the farmers with whom we work will be paid via mpesa. Having no cash exchange hands simplifies our work and lowers the risk of our driver carrying cash. It is truly amazing how necessity breeds invention. Now that I’m in the States, I truly miss how useful it is.