Kenya, World’s Leader in Mobile Money

Imagine a world where you can pay for a taxi ride, pay your bills and transfer money with just a few taps on your phone; a world where there’s no need for cash to shop, for a large machine to receive money from credit cards or for a bank account to save money. It sounds like a scene from ‘Minority Report’, doesn’t it? Well, in Kenya, this fantasy is fast becoming a reality.

While the cashless marketplace is not unique to Kenya, mobile money is. One third of around 60 million mobile money users in the world are Kenyans. With annual transfers being around US$10 billion, half of the world’s mobile money transactions are taking place in this African country.


Many people are unaware that anyone can buy something using their mobile phone in the First World, and banks have been trying for years to introduce this new technology to western consumers. For some reason, though, the concept just never quite caught on and it’s nothing compared to the penetration such an application has had in this ground-breaking east African country.

As a technological revolution rises in the developing world, many wonder why this time it’s not Japan but Kenya that is pioneering the cutting edge of mobile money transfers.

The Rise of Mpesa

Nearly a decade has passed since Kenya’s mobile money system Mpesa was launched by Safaricom, the country’s giant mobile service provider, and today the east African country is leading the world in mobile phone banking.

Who would have thought that paying for a taxi ride with your mobile phone is easier in Kenya than it is in London? As a matter of fact, it is common practice in Kenya to use Mpesa for paying bills, transfer money to someone who is elsewhere in the country, or to pay employees.

What’s most striking, however, is that mobile money is widely employed by Kenyans, regardless of their social strata or location – in other words, rural villagers haggle over produce and then close the deal using their Nokias. In fact, this application is used by a staggering 19 million of Kenya’s 44 million people. As a result, around 25% of the country’s gross national product flows through the mobile-money service.

What was originally designed as a system to make payments on microloans has been adopted by the population as a way to send money from urban centres to rural hometowns. A decade down the line, Mpesa has become the most successful scheme of its type on earth.

Why does Kenya lead the world in mobile money?

A revolution in mobile money transfer has occurred far away from the tech capitals of the world, in the heart of the African continent. It is certainly interesting that a developing country is the frontrunner of a vanguard service, but what’s most surprising is how other countries have failed to replicate Mpesa’s epic outcome. If several mobile-money systems have been launched, why was Kenya the success story? Three conditions made this country a fertile ground for Mpesa: high usage of mobile devices, a popular application – a cheap and simple way to send money -, and a leading mobile carrier, Safaricom.

Given Kenya’s unusual history of internal migration and strong family ties, this quick and simple method of transferring money spread like wildfire. Before then, transferring money was expensive, complicated and it could take over three days for the money to reach the family or sometimes it never arrived. With Mpesa, Kenyans in urban centres can send money home easily, cheaply and instantly to their families without the need of a bank account.

Political circumstances also played a part in Mpesa’s success. After the social unrest that followed the general elections in early 2008, some Kenyans regarded Mpesa as a safer place to store their money than the banks. Once Mpesa had a solid base of users, it made more sense for others to sign up for it.

Since then, Mpesa has extended its services to offer loans and saving products, disburse salaries and pay bills, which is particularly convenient for those who have no bank account.

Benefits for Kenyans

But what makes this new approach to banking such a killer application? For most of the Kenyan population, the days of hiding cash under the mattress are over as this system allows customers and businesses to pay for anything without cash, a bank account or even a permanent address.

This is great news for the majority of the population who have never had a bank account; now they don’t even need it since it has been substituted by their phones. As they make payments and build up savings on their phones, they become active participants of an economy they had been locked out from.

Since money is stored on their device, people living in isolated areas no longer have to carry great quantities of cash to markets or towns, risking being a victim of banditry and theft.

Electronic transfers are also particularly advantageous in a country where it is common for workers to send money back home to their families in rural areas and where other money transfer methods are expensive and inefficient.

With just a couple of taps on a mobile phone, a husband working in Nairobi can send money home to the countryside, 500 miles away. His wife can cash out at one of the many shops with M-PESA agents or leave the money on her device to make electronic payments in the hundreds of businesses who accept them.

Advantages for Tourists

Some of the fears that discourage tourists from visiting certain African countries are related to security, money transactions and bureaucracy.

In Kenya, all you need is an unlocked mobile phone, a SIM card and a registration with one of the networks for mobile money, load money onto your phone number and you can purchase anything or transfer money in a matter of seconds. Just a few taps, exchange a few numbers and that’s it – no cash, no need for banks, and what’s even better, no queues.

This service is the answer to most tourists’ concerns about security. While you risk being robbed if you carry cash around, mobile money is safer as it is password protected.

Being left stranded in Kenya is less of a risk with mobile money. If you are stuck in the countryside and you have a friend somewhere else within Kenya, they can send you money within seconds with Mpesa.

The Possibilities of Mobile Money

Thanks to Mpesa, within the next years, Kenya could become one of the most connected and modern economies in the developing world. And we are talking about one of the world’s poorest countries with an average annual income of below US$1000 per capita.

This success story shows the potential of adaptable technologies as an alternative to complex economic transactions in countries with flawed infrastructure. But in the big picture it shows how a revolutionary approach to banking like Mpesa can change economies across Africa.

This phenomenon has encouraged other developing countries to follow in Kenya’s footsteps. Namely, mobile-money schemes are starting to do well in countries like Tanzania and Afghanistan, and some others like Brazil and India have shown initiative to use similar systems aimed at bringing financial access to the poor and isolated.

While some factors behind Kenya’s success cannot be replicated, many of them can and thus big bets are being placed on Mpesa for the future of developing countries.

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