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Mobile money enables financial inclusion

Tuesday June 30 2015

A customer makes a payment from their phone at a supermarket. FILE PHOTO | DIANA NGILA

A customer makes a payment from their phone at a supermarket. FILE PHOTO | DIANA NGILA | NATION MEDIA GROUP

Until less than a decade ago, many Kenyans had to set aside time at the end of each month to queue at banking halls of different utility companies to pay their bills.

Many employees also faced an uphill task sending money to their families in rural areas. They had to rely on a trustworthy relative travelling upcountry or expensive courier services.

Statistics show that before the launch of mobile money, 58 per cent of Kenyans sent money by hand, 27 per cent by bus, while 24 per cent used money order. Only one in 10 people used the formal banking system to send money or pay bills.

Fast forward to today. Mobile money has gained an unassailable place in the hearts and minds of Kenyans. According to the online money transfer service WorldRemit, remittances to sub-Saharan Africa are projected to reach $33 billion in 2015, reflecting an eminent transition to a cash lite society.

Furthermore, there are more than 260 mobile money service providers in the world, more than half of which are in sub-Saharan Africa.

East Africa in particular has recorded significant growth of mobile money services. Ongoing international money transfer initiatives are aimed at enhancing mobile money as a medium of transaction across the globe.


Safaricom has partnered with Vodacom in Tanzania to allow the sending and receiving of money within the East African Community. The initiative, which is consistent with the One Network Area initiated by the East African heads of State, is expected to cover other EAC countries in the coming months.

Initially perceived as a threat to the banking sector, mobile money has gradually earned its place in the formal financial fold through partnerships and integration with leading banks, saccos, and insurance companies. Customers are now able to access their bank accounts through their mobiles phones.

They no longer have to visit an ATM or endure long queues in banking halls. Now more than ever before, customers are in control of their funds.

More and more employers are now using mobile money to pay their workers’ salaries, as do organisations listed on the stock exchange to pay dividend to their shareholders.

Cash remains the legal tender and can, therefore, not be eliminated. However, we have made major strides that prove that our economy does indeed embrace the cash lite direction.

Mobile money used to buy goods and pay for services has enabled cashless merchant payments and facilitated trade, at the same time improving business efficiency.

It is estimated that nine out of every 10 transactions in Kenya are based on cash.

Most of the non-cash transactions across the various pay points are made using mobile money. There is a need to adopt a mobile payment solution. Many businesses will benefit as more customers turn to mobile payment methods.

As Heraclitus remarked, “The only thing in life that is constant is change.” The exchange of goods and services has evolved from barter trade to the modern currency system. It is now moving to a cash lite and cashless system.

Mobile money will play a pivotal role in global remittances, helping to reduce fees and speed up funds transfer. Most importantly, mobile money is a key enabler of financial inclusion.

The writer is the general manager in charge of financial services at Safaricom