M-Pesa boosts war against poverty

• ‘Africa has a culture of saving but people often do not have the mechanisms to save’

The M-Pesa network is a model for taking banking services to the grassroots, the World Bank has said.

The managing director, Ms Ngozi Okonjo-Iweala, said M-Pesa is the ideal story of why it pays to invest in the poor.

“Africa has a culture of saving but people often do not have the mechanisms to save. M-Pesa provides a low-cost transaction platform which Kenyans can use to save,” she told a conference in Washington DC last week.

The bank’s lead economist Wolfgang Fengler said the ICT sector kept Kenya’s economy growing at 3.7 percent through the last decade.

“Without the telecom sector, growth would have only been 2.8 percent, barely matching population growth,” he said. “Now, we see that ICT is starting to transform other areas of the economy, especially the financial sector.”

Mr Michael Joseph, the former CEO of Safaricom, explained how M-Pesa had achieved such large scale success in Kenya, and outlined the key elements for replicating its success.

He said that building trust with consumers using a strong brand, and making it accessible even in the remotest of villages were vital.

Safaricom also made it a point to offer superior customer service and built up a strong agent network through which customers could exchange electronic balance for hard cash. M-Pesa currently has 23,000 agents spread throughout Kenya.

Panelist and ICT Sector Manager Philippe Dongier said the M-Pesa experience offered huge opportunities to replicate mobile banking globally.

“Given the difference between the level of access to mobile phones and access to bank accounts, mobile banking has the unique potential to bridge the gap between the banked and the unbanked,” Mr Dongier said.

He also identified similar transformational opportunities combining the use of mobile phones, geo-spatial tools and citizen feedback to improve good governance and accountability.

Mr Joseph ended the conference by stressing the need to continually innovate to meet customer needs, which in this case, are the poor and under served.

He cited the recently launched M-Kesho, which gives any M-Pesa customer the ability to start saving with as little as $1 and earn interest on the principal.

“Kesho” is Kiswahili for “tomorrow” or the “future.” Joseph mentioned that in the short time since its introduction, M-Kesho has resulted in approximately 650,000 users opening saving accounts.

Mr Joseph shared that M-Pesa has become so ubiquitous that customers have even turned the name of the platform into a verb.

“M-Pesa is so successful, now it has become a part of the Kenyan vocabulary and is used to describe mobile payments: people in Kenya now ‘m-pesa’ their money,” he said.