By Rawlings Otieno

IN NAIROBI, KENYA: Some business people boarded buses confident that by the time they reached town, their friends or relatives would have sent them money through M-Pesa for the day’s stock.

Others committed themselves to settle overdue soft loans taken from friends in the morning, but there were also those who had money in the phone accounts but could not afford their Sunday treat for themselves and family.

They also could not walk up to the till in supermarkets where M-Pesa payments are accepted. For many urban dwellers, yes they had money in their phones, but could not load airtime on their phones or top up their depleted post-paid electricity accounts. That was the agony and frustration that reigned yesterday following the collapse of Safaricom’s M-Pesa service, which premiered in Kenya 2007, and has become part and parcel of the ordinary Kenyan’s life.

So big is M-Pesa that its agent network was 39,400 countrywide, according to Safaricom’s latest annual report. Projections of M-Pesa revenue for this year are Sh16.87 billion, a leap of over Sh5 billion from last year.

The service has 14.9 million registered customers, and its suspension quickly rekindled memories of the pre-2007 period when transfer and receipt of money through the phone was non-existent, and most financial transactions were through inter-bank exchanges, expensive wire transfers through licensed dealers, and even sending of money physically through friends and a network of courier services.

 Unnecessary risk

In all these cases, sending money meant travelling, queuing both to send and receive in the other end, and almost always you were certain it would take up to three or more days for the money to be received, and through the banks to make it quicker, you had to pay more.

But not so with the entry of M-Pesa, one of the innovations the world now respects Kenya for, which even made it unnecessary to risk carrying money around towns, where one risks losing them to suave pick-pockets and shameless muggers.

It is notable, however, that the disruption did not affect the money transfer services offered by other mobile telephonies, namely Airtel, Orange and Yu. Safaricom attributed the collapse of the service to, a major outage that led to the collapse of its servers in Germany and failure of its network locally. By last evening, any request to through M-Pesa would be met with the automated response: “Dear customer, M-Pesa is currently undergoing maintenance and is unable to process your request. We apologise for the inconvenience.” 

Safaricom’s statement following the crash that Kenyans woke up to in the morning also raised questions as to whether the service should continue being hosted in Europe.

Severance of network

The firm’s management has in the past promised to find a lasting solution including hosting the service locally after similar disruptions. 

There had been plans to relocate M-Pesa servers to Kenya from Germany, which is expected to improve the reliability of the mobile money platform and cut down on overheads. Once the servers are relocated, experts argue, it would eliminate disruptions that occur whenever the undersea optic fibre cable is damaged, and reduce the time taken to restore the system in cases of cut-off or severance of network.

According to the statement sent to newsroom in the morning, there was a power outage in a Vodafone server in Germany that occurred on Saturday night and damaged server discs.

Safaricom Chief Executive Bob Collymore explained that the technical teams, both in Germany and Kenya, were working round the clock to restore normalcy.

“Our technical teams both here and in Germany are working to restore normal services as soon as possible. However, we expect services to resume later on today. We regret the inconvenience caused,” said Collymore in the statement.

Part of Safaricom’s game plan is to grow its data revenue by increasing M-Pesa’s share of bulk corporate transactions that are currently facing the challenge of time. The service has had a successful stint since its launch creating employment for thousands of Kenyans.

It transacts on average Sh2.3 billion daily across all networks in Kenya, with mobile money deposits made by Kenyans in 2011 and 2012 reported at Sh672 billion.

Hundreds of institutions ranging from banks, insurance firms, schools and Sacco groups use M-Pesa to pay bills or dividends. Daily transactions average Sh2 billion.

A spot check by The Standard showed most service agents shops remained closed with the staff citing massive losses due to the outage.

An agent within Nairobi who requested anonymity said they had been affected since he makes a living through M-Pesa services and wished for a quick repair of the servers. “We have been mostly affected, the business is down I cannot transact the services and this is where I earn a living,” said the agent.

It took a while for most of the M-Pesa customers to realise that the service was down with majority of them making frantic efforts to send money, buy airtime or make withdrawals in vain.

The outage prevented M-Pesa customers from sending money, depositing and withdrawals, ATM transactions, purchase of airtime, bank to M-Pesa transfers, paying of bills and buying goods or even web-based transactions.

Since the introduction of the mobile money transfer service, the number of transactions have grown and become a major contributor to the operator’s profits with close to Sh1 trillion in transactions annually.  Even though, the voice segment of Safaricom still contributes the lion share of its revenues, but it is slowing down due to price wars. Voice business accounted for Sh68 billion while data, which all players reckon will be the gem of future, brought in Sh6.5 billion.

In a bid to increase use of other services that it offers alongside voice, Safaricom has in the last few weeks been running a promotion to drive usage of M-Pesa, which in the 2011-2012 financial year, raked in Sh16.9 billion.

Systems upgrade

Mobile phone operators are increasingly banking on data, short messages, value added services and managed services to fuel their next growth phase. The short messages (SMS) business contributed Sh7.8 billion, which is equivalent to 3 per cent of the Safaricom’s revenues of Sh107 billion.

The operator has suffered technical problems with the M-Pesa service before in recent months.

Service was disrupted during a systems upgrade in April and from another cable break the operator suffered at the end of last year.

“We would like to assure our customers that their funds remain safe. We appeal for patience during this time and regret the inconvenience caused,” assured Collymore.

Orange Kenya and Airtel are also eyeing a piece of the revenue, with their launch of third generation networks (3G).