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?
Before we look into the intricacies of this question, it is apparent that the Kenyan economy is deeply integrated with Mpesa services and in extension, our lives in general. In order to assess the depth of this dependence, there is need to back our assertions with a second look at the statistics, albeit briefly.
According to the report filed by the Communications Authority of Kenya, Safaricom has a total of 21,574,006 users who use their Mpesa and its associated services as of Q2 of the Financial Year 2016/2017 (the following statistics are all made in reference to Q2 2016/17). All of these users are served by 124,084 agents, and the total number transactions that were performed for this period were valued at KES 892,878,930,121.
Here is where things get interesting: of the 356,786,745 transactions made, 222,092,539 of them were commerce-based. Person to person transfers constituted approximately 47.45% of the value of transactions, while commerce transactions constituted around 45.77%.
There are several factors that favours the mobille money service in Kenya. Some include the exceptionally high cost of sending money by other methods; the dominant market position of Safaricom; the regulator’s initial decision to allow the scheme to proceed on an experimental basis, without formal approval; a clear and effective marketing campaign (“Send money home”); an efficient system to move cash around behind the scenes; and, most intriguingly, the post-election violence in the country in early 2008