Msafiri-2017-11

BUSINESS / 43
IN LESS THAN A DECADE,
transferring money by mobile phone has
become commonplace in Kenya, and now,
in many parts of Africa.
Thanks to mobile money, which also
allows users to save, borrow, buy goods
and pay bills using a mobile wallet,
millions have been integrated into the
formal financial system in record time.
Mobile money snowballed in 2007,
when a micro-finance experiment between
Kenya’s mobile telco Safaricom and its
UK counterpart, Vodafone, created
mobile money platform M-Pesa. Now,
M-Pesa and similar services are turning
Kenya into a cashless society. Where
cash, with its inefficiencies and associated
risks, reigned supreme in the past, mobile
money is now delivering faster, traceable,
less-risky and convenient options, which
are turning the case against cash.
Mobile money has become so crucial
to Kenya’s economy, that on the few
occasions that M-Pesa has been offline,
many small and medium businesses have
ground to a halt.
A HEALTHY WALLET
With 26 million users transacting
US$65.8 million in the last financial year,
M-Pesa is considered to be the largest
mobile money service in the world. As
impressive as the numbers are, Safaricom
CEO Bob Collymore says the company
has a different matrix with which to
measure success. “A lot of people talk
about M-Pesa in terms of the percentage
of the country’s GDP that’s going through
it (45 percent by some estimates), but we
don’t see it in those terms,” he says. “What
really makes the difference is the impact
M-Pesa is having on the development of
life-changing solutions.”
As an example, Collymore describes
M-TIBA, a mobile-based health-insurance
scheme that allows low-income customers
to send, save and receive funds that are
specifically locked to health insurance.
“Today, we have nearly a million people
and about 300 healthcare centres signed
up for M-TIBA,” says Collymore. “And
this means that people can save money
each month that can only be used in the
health wallet.”
POCKET POWER
Collymore sees limitless opportunities
for mobile money to improve value chains;
from agriculture, where farmers are now
getting paid instantly for milk delivered,
to education, where paying school fees
with mobile money is common.
New subsectors and companies are
emerging with the mobile money platform
as the key enabler. Take, for example, the
pay-as-you-go solar-energy providers
where, for as little as US$0.48 per day,
off-the-grid users can access clean energy
to power their homes. M-KOPA Solar is a
leader in this category; the company has
already connected 500,000 households
and recorded one million transactions
per month in Kenya and Tanzania.
Another company, PayGo Energy,
is leveraging mobile money and smart
metres to provide clean LPG cooking gas
to customers, so that users only pay for
what they need (at their convenience).
MOBILE MOMENTUM
A combination of factors has led to
the rapid growth of mobile money in
Kenya. Tim Mukata, Innovations Lead at
FSD Kenya’s Financial Sector Deepening
programme, offers two key factors specific
to Kenya. “The culture of people working
in the cities and sending money to their
families in rural areas was already
entrenched before M-Pesa,” he says.
Where local inter-city buses acted as
money transfer agents with their parcel
services, M-Pesa has made headway,
registering 471 million transactions in the
first quarter of 2017. The other factor
Mukata highlights is intense competition
in the mobile-telco space, which has
pushed two main players to innovate and
invest in infrastructure.
According to Mukata, Safaricom
and Airtel’s installation of base stations
across the country was forward-thinking,
contrary to the conventional telecoms
business model where a Base Transceiver
Station has to be supported by the
demographics to justify the investment.
“These investments laid the foundation
for a dynamic and innovative mobile
telco sector,” he says.
AUTOMATIC ACCESS
Mukata goes on to say that the
current emerging opportunity is the data
being generated by service providers and
related services, especially in the nascent
fintech sector, where mobile money has
fused finance with technology to make
financial services more accessible to the
general public. >
“The real opportunity is the data
being generated by service providers,
especially in the nascent fintech sector”
Solution for Small Retailers
The M-Pesa service was launched in March 2007 to enable customers to
safely send, receive and store money using a basic mobile phone and, more
recently, using a smartphone app. Since then, the use of the service has grown
exponentially. Now, M-Pesa can be found on almost every street corner in Kenya.
Alamy