Kenya mobile money transfer: the first of its kind in the world

By Standard Reporter

KENYA: In 2007, Kenya launched a groundbreaking new money transfer service mainly targeting unbanked people. The pioneering service by Safaricom, the country’s largest mobile telephone operator, was named Mpesa. “M” stands for mobile while pesa is Kiswahili for money.

Within eight months, it had more than 900,000 subscribers.

And in a few years, the service through which people send money via a simple SMS, captured the attention of the world as other networks and countries rushed to adopt it. Yu, Airtel and Orange have since launched their own money transfer services.

Safaricom partnered with Vodafone to launch the service, the first of its type in the world. Mpesa has come to symbolise the Kenyan people’s penchant for innovation that solves a myriad problems.

 “It is aimed at mobile customers who do not have a bank account, either by choice, because they do not have access to a bank or because they do not have sufficient income to justify a bank account,” says Safaricom.

Today, it can be used to pay for a drink at the local pub, buy groceries, pay school fees and rent. In addition,  people can apply and receive small loans via SMS.

It is the most successful transfer system of its type in the world. Other countries have faltered in their attempts to introduce a similar system.

It is used by more than 17 million people on the network, Kenya’s largest. According to the Communication Commission of Kenya, funds transferred through the service between October and December last year hit 226 billion. The number of mobile money subscribers in all networks also increased to 21.1 million, said the CCK report.

Since a large cross section of Kenyans had no bank accounts, Mpesa was favoured because one is not required to have one to use it.

“Additionally a customer does not need to be a subscriber on the provider’s network to receive cash. The combination of these attributes is what makes it a world’s first,” says Safaricom.

“Some of the factors behind Kenya’s lead cannot be copied; but many of them can, which means it should eventually be possible for other countries to follow Kenya’s pioneering example,” said the Economist  in a report in May.