When your mobile phone becomes your bank: M-PESA in Kenya

I have recently been to Kenya and, despite the fact I had already heard about this money transfer system, I was struck by the omnipresence of a mobile money service called M-PESA (meaning “mobile money” in Swahili) . The principle is pretty simple: if you have a mobile phone, you can withdraw or transfer money with your mobile from virtually anywhere in the country.

I am not the first one at all to discover the importance of this system. Since its inception in 2007, many studies have tried to understand the success of M-PESA in Kenya. Most of the time, researchers analysed why such a system was so successful in an African country and not in the rest of the world. They also examined why M-PESA did not know the same success in other African countries such as Tanzania or South Africa.

M-PESA menu

M-PESA menu

How does it work? You only need a mobile phone with Safaricom as your operator. As for every phone in the world, you can top up your credit. Now imagine that you have a bank account on your phone as well. Your company can choose to pay you partially by topping up your M-PESA account and giving you some cash. Without the intermediary of a bank, you can also buy items in shops or pay your bills with your mobile phone. Finally, because there are so many M-PESA agents in the country, you can withdraw money from nearly anywhere.

A Safaricom/M-PESA agent in the village of Longonot (December 2012)

A Safaricom/M-PESA agent in the village of Longonot (December 2012)

Originally, M-PESA was created to implement micro-finance schemes throughout Kenya but it is currently becoming a bank system. I was lucky to meet the head of the technical services of Safaricom and he explained to me how M-PESA will soon open what looks like “real” bank accounts for its customers. For example, in 2013, customers will be able to borrow money from M-PESA.

Since the beginning of the 2000s, many commentators have talked about the “mobile phone revolution” in Africa. Even if its success is for the moment limited to Kenya, M-PESA is clearly an illustration of the importance of technologies which can foster economic development in Africa.

Vincent Hiribarren


About perspectivesonafrica

Research and news about Africa
This entry was posted in Kenya, Mobile Phones and tagged , , . Bookmark the permalink.

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