Rendile tribesmen: the M-Pesa system now handles 100bn Kenyan shillings a month© David Mbiyu/demotix
A decade ago, when my colleagues were working on the feasibility study for the now world famous M-Pesa system in Kenya, the idea that mobile phones would transform the economies of emerging markets was hardly mainstream. Yet the evidence is incontrovertible: as mobile phones have spread, they have brought access to information and, of particular interest to me, financial services. Access to financial services brings social inclusion, which transforms lives.
Kenya was an early adopter of mobile money services. The Department for International Development and Vodafone originally built the M-Pesa system as a means to collect repayments on microfinance loans. But they made a brilliant decision: they created prepaid accounts and let consumers transfer money between these using their mobile phones. In effect, people could text money to one another.
The figures are staggering. The system is heading towards handling 100bn Kenyan shillings per month (£695.7m). Over 30,000 merchants are now registered to accept M-Pesa payments. About a third of all Kenyan economic output passes through it. Millions of Kenyans now keep their money in safety instead of under the bed. The M-Shwari mobile-based savings scheme has over 2.4m active customers with nearly 2bn Kenyan shillings in deposits. These are bank accounts that didn’t exist before M-Pesa.
Mobile money (where the regulators allow it, I should add) is spreading across Africa. Orange launched cross-border mobile-to-mobile money transfers between three African countries—Mali, Senegal and Côte d’Ivoire. You can even use Pingit, a Barclays system available through the App Store, to send money from the UK to M-Pesa. The impact of this technology continues to grow.
But there is more to this than just moving money. Now in Kenya, more than 70 per cent of prepaid electricity users buy their electricity tokens using their mobile phones. And the ripples are spreading: the latest Central Bank of Kenya statistics show a decline in the use of credit and debit cards, even though the number of Kenyans who hold them is rising.
Kevin Donovan from the University of Cape Town has suggested that these mobile money services can serve as a general purpose technology platform on which other services can develop, and this appears to be happening. One example is the “Pay Bill Account” introduced in Kenya last year, which allows users to pay for a wide range of services using their mobile phone.
Across the developing world mobile phones are being used to spread solar power—M-KOPA Solar, a Nairobi company selling solar generation devices, got 50,000 households in its first 15 months. Customers pay in instalments using their phone.
But here’s the thing. Most of this has been done using the kind of phones that we in the west stopped using years ago: phones that didn’t run graphical operating systems or have big screens or connect to iTunes. But now the smartphone revolution is spreading. At the beginning of the year, South African mobile operator MTN launched an own-brand Android smartphone for less than $50.
Now the entrepreneurs of Africa are shifting their gaze from text messages to apps, with the attendant leap in capability. The mobile money revolution in Africa is only just beginning.
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