Money goes Mobile: Kenya leads the world!

9 July 2010 at 11:38 3 comments

By Robert Karanja

KF 11, Kenya

In the last two years, the development of mobile money transfers has grown by leaps and bounds in Kenya and today almost every major bank has developed a mobile money product or is in the process of launching one. This represents the next frontier in the provision of banking services to a population that was previously completely left out of the banking system. Dare I say it, Kenya leads the world in mobile banking innovation. Here is why…..

Safaricom the country’s largest mobile service provider with over 15 million subscribers first launched its MPESA mobile money service about two years ago and since then this service has grown by leaps and bounds. MPESA was the world’s first mobile money service. Today over Kenya Shillings 2 billion (US$25 million) is sent and received every day using MPESA and most of these transactions are very small meaning that hundreds of thousands of people are using the service every day!

Following Safaricom’s launch of MPESA the second largest mobile network in Kenya, ZAIN launched a mobile money service called ZAP. ZAP just as Safaricom does enables people to use their mobile phone to do the following:

Pay bills for goods and services, receive and send money from friends/family/business associates, send and receive money to their bank accounts, withdraw cash, buy mobile airtime. This is just the beginning developers are working day and night to add more applications to mobile phone services.

In the past few months no less than three major banks in Kenya have launched their mobile money services. Kenya Commercial Bank launched “KCB Connect”, Family Bank launched “PESA PAP” and the largest bank in Kenya, Equity Bank launched “MKESHO”

These developments also lead me to believe that there is a great future in mobile microfinance and a few months ago a small, start up Dutch based MFI called Musoni set up shop in Nairobi and their entire business model is based on mobile microfinance. Musoni will be able to disburse loans and collect payments using mobile forms as a platform. They are able to disburse loans to new customers within 6 hours from when the loan application is submitted. This is a record in Kenya and one of the fastest loan applications I have ever heard of.

I am excited about all these developments in mobile money and cannot wait to see what comes up next.

Entry filed under: Kenya, KF11 (Kiva Fellows 11th Class). Tags: , .

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  • 1. Fehmeen | Microfinance Hub  |  12 July 2010 at 03:10

    $25 million is simply a stagging amount, considering the poverty rate in Kenya is over 40% (46% in 2007). It would be interesting to see if the provision of mobile banking can be correlated with some sort of social change in the economy, as the advertised benefits of the service predict. Over time, we may look at data and see the money being transferred to schools or hospitals has increased, indicating better standards of living.

    • 2. Robert Karanja  |  12 July 2010 at 06:22

      Lesson learnt from this is that there is plenty of under utilised resources in the economy and mobile banking and other similar platforms provide an opportunity for funds to make it around the country more efficiently. Many Kenyans have been waiting for such an opportunity to transfer funds at an affordable rate and mobile banking is filling this void.

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