Mobile Money: What a Journey From M-Pesa in Kenya!


Mobile financial services are still on the rise in Kenya. In the third quarter of this year, 730.2 million transactions and about $19.6 billion went through this process in the country, according to an announcement by the Kenya Communications Authority (CA). This is an increase of 19.45% compared to last year: during the same period, the foundation actually acknowledged transfers of $18.6 million. What is the reason for this growth? The mobile penetration rate reached more than 100% at the end of September, compared to 97.8% in June, as a result of the investments made by various telecom operators in expanding their networks and improving the quality of their services. It also increased the number of active mobile subscriptions from 45.5 million to 46.6 million, according to the CA.

If the sector is healthy, it is because Kenya has recently taken new measures to facilitate its expansion. The new interoperability system was implemented in April, allowing the market-leading M-Pesa client to send money in real time to the recipient’s Airtel Money account. The operation was made possible thanks to an agreement of telecom operators, which guarantees interaction between the six mobile money transfer platforms in the country for a period of one year. Moreover, these provisions recommended GSMA Mobile Communications Policy Handbook.

Kenyan leadership comes from afar

Since Safaricom launched M-Pesa in 2007, the mobile payment industry has mushroomed. The leading platform now has more than 17 million users – more than two-thirds of the adult population – and represents 25% of the country’s GNP. Saving time and money, effective marketing, and Safaricom’s dominant position… There are several factors that could explain this success. But the system really stood out during the post-election violence of 2008, when people used M-Pesa to funnel money to stranded people, for example, in the slums of Nairobi.

Some Kenyans have also noted that M-Pesa is a safer place to store money over banks, and some are suspected of being involved in ethnic disputes, The Economist notes. Word of mouth took care of the rest, and the network of users grew as the services multiplied. Today M-Pesa also offers credit and savings products, which Kenyans can use to pay salaries or bills. Well adapted to the everyday reality of the population, in countries where there is no consensus on banking systems, the structure was simulated in Afghanistan and India.

Kenya’s impact on the ecosystem of neighboring countries

But Kenya’s mobile money transfer model was the first among its neighbours. In Uganda, the total value of transactions via mobile financial services jumped 38.4% from January to June 2018, reaching 73.1 trillion Ugandan shillings, or roughly $19.5 billion. This rise is mainly due to the increase in the volume of transactions, which rose from 1,100 billion at the end of June 2017, to 1,300 billion by the end of June 2018, according to the Central Bank. Thanks to improved connectivity, mobile money now allows Ugandans to withdraw or deposit money into their accounts, directly from their mobile phone. A market involving seven telecom companies.

Beyond format, continental influence

But beyond individual country-specific initiatives, countries in the region are now seeking to harmonize their skills. In 2015, the East African Community (ECA) countries launched a Single Communications Zone, with the aim of reducing the cost of roaming connections. Mobile money interconnection is currently being considered. The harmonization of ICT policies, with the aim of attracting more foreign direct investment in the sub-region, was also discussed on November 22, on the sidelines of the “2019 Koza Radio Awards”.

If East Africa has been at the forefront of the issue for ten years, the other side of the continent has not been left out. In Ghana, the value of the number of transactions recorded via a mobile phone now accounts for 75% of the country’s GNP. And the figures for the sector are more than encouraging: according to the International Monetary Fund, the number of registered accounts jumped to 24 million in 2017, compared to 3.8 million in 2012. The number of transactions is close to a billion. Last year, compared to 18 million five years ago. Ghanaians today use mobile money to transfer money, but also to recharge phone balances or to obtain insurance.

The last gesture in favor of the development of this system: the launch of the second phase of interoperability at the end of November. An operation announced by the Minister of Information, Kojo Obong Nkrumah, will allow residents more freedom to use electronic payment methods. To the south, in Angola, mobile money should appear for the first time in 2019. According to its official, Pedro de Castro e Silva, the National Bank of Angola (BNA) should introduce new legislation on the payment system, and in particular for mobile payments, with the approval of Parliament.


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