Kenya’s mobile money sector

I live in the heart of tech-savvy Silicon Valley.  The other day, I went out for a meal.  After ordering a mouthwatering burrito, I went to pay only to realize that my wallet was on my desk at home.

And so I hungrily trudged home, wishing that I was back in Kenya with its ubiquitous mobile banking infrastructure, led by Safaricom.  While in Kenya, I was a regular and avid user of Safaricom’s M-Pesa services – the $4 garbage bill?  M-Pesa.  The $1 motorcycle ride home?  M-Pesa.  The $100 plane ticket?  M-Pesa.  The $300 rent?  M-Pesa.  Settling a dinner bill among friends?  M-Pesa.  There were a few months where I lived exclusively on my M-Pesa balance, and it was awesome.

This and other exciting aspects of the social enterprise sector in Kenya are reasons why entrepreneurs are moving to Nairobi in droves – if you can imagine it, you can probably build it there.  And many organizations in Kenya are applying mobile innovations in new and exciting ways to expand their customer base and improve their operations.

This surge in technology application is driven by M-Pesa.  M-Pesa agents are everywhere in Kenya, with an emphasis on serving those without access to other banking options.  Because they have been so strongly focused on serving the bottom of the pyramid and achieving national distribution, others were able to follow suit.  One Acre Fund, an innovative social enterprise that serves primarily subsistence farmers in remote rural regions, operates on an entirely cashless system using M-Pesa.  Bridge International Academies is also “cashless“, with its chain of low-cost private schools relying on M-Pesa to pay teachers, collect school fees from students, and ensure that schools are run efficiently.  Because mobile banking leaves a paper trail for all transactions, this also improves the transparency and accountability of operations, and reduces the potential for petty theft and robbery.

This technology also unlocks the potential for innovative savings products for large and transformative purchases.  A chain of high-quality low-cost maternal health clinics in Nairobi called Jacaranda Health is using a mobile savings program called Mamakiba to help women save for the large and anticipated cost of a delivery in their clinic.  Similarly, Kickstart uses a mobile layaway program to help small-scale farmers save up to purchase one of their efficiency-improving MoneyMaker pumps.  These programs provide a structured and transparent method of savings that helps people to achieve a major goal and as a result receive a life-improving service that would have otherwise been out of their reach.

And finally, mobile banking amplifies the potential of peer-to-peer exchange, especially between people in different countries, in a way that was previously inconceivable.  A new charity called GiveDirectly uses a peer-to-peer model to allow donors to give money to a recipient registered in its network in rural Kenya – the donor pays via credit card on the website, and the recipient immediately receives money on his or her phone. These unconditional cash transfers are designed so that recipients have the freedom to use the cash however they think will benefit them most and eliminate the bureaucracy associated with most aid programs.  Conversely, Sasa Africa leverages a peer-to-peer approach to drive business and international trade for Kenyan entrepreneurs.  Women in Kenya produce hand-crafted goods that they list on the Sasa site.  Customers in the US and Europe can purchase these items via the site, which transfers the payment to the vendor’s mobile phone.

At its core, there is a common sense of hustle, vision, and creativity in Kenya now that seems to be unlike anywhere else.  This spirit is supported by the iHub in Nairobi, which connects people creating technology solutions for those living at the bottom of the pyramid, and it is fostered by a strong community of founders and leaders in this new sector.  It’s an extraordinary place that is uniquely poised to deliver returns on both social innovation and technology.

Image source