Financial Sector Development in Africa: Opportunities ... - World Bank

Mobile Financial Services in Africa: The Next Generation 51
Box 2.1
Offering Additional Services: M-Kesho in Kenya
M-Kesho is the brand name of Equity Bank’s package of financial products issued
to clients who use the M-PESA mobile payment system in Kenya. It was launched
in May 2010 jointly by Equity Bank and Safaricom, the MNO that runs M-Pesa,
under a one-year exclusive arrangement. The core product is an interest-bearing
bank savings account, although credit and insurance options are also available.
M-Kesho accounts are opened either at an Equity Bank branch or at an M-PESA
agent’s office, where the bank has placed one of its representatives.
The M-Kesho account offers only electronic transaction functionality: money
can flow into and out of the account either from the customer’s M-PESA account
or (optionally) from a normal Equity Bank account. To deposit cash, customers
must first load their M-PESA account at an agent and then initiate a transfer to the
M-Kesho account. This transaction is free to the consumer, although Equity Bank
pays M-PESA a fee for each transfer. To withdraw cash, the process is reversed, with
the customer paying for the transfer out of the account, as well as the standard
M-PESA withdrawal fee.
M-Kesho is therefore part of a next generation of mobile-enabled financial
services, adding savings, credit, and insurance to the mobile transactional offering
already in place. It has created a new form of partnership between a bank and a
telecommunications company.
Source: Rosenberg 2010.
mobile money—Japan and Korea were early movers among developed
countries, and developing countries Malaysia and Thailand have also had
active mobile money deployments. Therefore, the spread of mobile penetration
alone is not sufficient to explain the growth phenomenon in
Africa.
For this task, the “diamond” of reinforcing factors that create regional
competitive advantage, proposed by Harvard Business School professor
Michael Porter, is a helpful framework. It is depicted in figure 2.2.
Starting with the right hand of the diamond in figure 2.2, demand
conditions in Africa have clearly helped: accelerating urbanization of
people who retain strong links to family members in the countryside
creates strong demand for safe and efficient money-transfer mechanisms.
But, like rising mobile penetration, internal migration is not
peculiar to Africa, and indeed varies across the continent. Thus, mere