Kenya is king of M-PESA world

Lynn Prins

M-PESA has put Kenya on the map as the leaders of the world when it comes to mobile money, making purchases and transfers so much easier, safer and better.

It was even said that paying for a taxi ride has been considered easier in Nairobi, than in New York and taxi fares are popular purchases when it comes to the use of mobile money, especially with the different taxi services such as Uber.

But apart from just purchasing goods and services, just imagine how convenient this money-transfer scheme has become for the many migrants having to send money to their families, no wonder Kenya is king in this department.

M-PESA, E-Wallet or mobile money as it is known was launched in 2007 by Safaricom, the country’s largest mobile network operator in Kenya.

In 2013, an astounding 43 percent of Kenya’s gross domestic product (GDP) flowed through M-PESA, with over 237 million person-to-person transactions using their phones and is by far the most successful scheme of its type.

Here’s why Kenya leads the world in mobile money?

M-PESA was originally designed as a system to allow microfinance-loan repayments to be made by phone, reducing the costs associated with handling cash and possibly lower interest rates.

But after pilot testing, it was broadened to become a general money-transfer scheme.

According to a research from the University of Manchester, Mobile Money was successful in Kenya because of a combination of government support and consumer demand, which was driven by the need to secure cash transactions during political instability.

The post-election violence in the country in early 2008 is an example. M-PESA was used to transfer money to people trapped in Nairobi’s slums at the time, and some Kenyans regarded M-PESA as a safer place to store their money than the banks, which were entangled in ethnic disputes.

World Bank economist Wolfgang Fengler adds that having a mobile operator such as Safaricom with more than 50 percent market share also helped.

Safaricom’s management also understood that the success of M-PESA was ultimately about people management, not technology. Many innovations fail because management focuses exclusively on designing and launching a product, and assume that technology will take care of itself afterwards. The opposite is true. You need people to run machines and the interactions you get after product launch can generate even better products. The true secret of M-PESA’s success is the management of the agent network, which grew from 300 initially to almost 30,000 today.

It is believed that many innovations fail because management focuses exclusively on designing and launching a product, this has them assuming that technology will take care of itself afterwards. However, the opposite is true.

Rember one needs people to run machines and the interactions you get after product launch can generate even better products. The true secret of M-PESA’s success is the management of the agent network, which grew from 300 initially to almost 30 000.

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