Last week, I went to Kenya and helped a rural school get online with e-readers. As I traveled from the capital Nairobi to Koru, a small town in the southwestern Nyanza Province, my eyes kept landing on the ubiquitous, hard-to-miss, bright green M-Pesa buildings along the highways, nestled between mud huts and on dirt roads near makeshift fruit stands.
After talking with several locals informally and then coming across an article in Kenya Airways' in-flight magazine, Msafari , it hit me: Kenyans have fallen in love with mobile money transfer via their cellphones. Leapfrogging the Western world, this developing East African country, where electricity and running water still does not reach every home, is using technology and mobile services to propel itself forward at an impressive pace.
M-Pesa, which literally means mobile money (pesa is the Swahili word for money), was launched in March 2007 by telecom operator Safaricom, in partnership with Vodafone. The idea behind the mobile money transfer system was to meet the needs of the millions of people, most of them poor and under-served, who do not have bank accounts or access to more formally established financial systems.
While the starting point may have been to provide cash, micro-financing, and money transfer alternatives to those with the most need, the concept has spread like wildfire. The service is used on a daily basis by everyone from goat herders to taxi cab drivers to executives. Text messaging allows them to send and receive money via agents to individuals and companies for services rendered, products bought, and even wages earned. Some people mentioned to me that many small businesses have been launched these last few years, and their success is directly linked to their ability to send and receive reliable payments via mobile money accounts. A BBC post says the mobile wallet has revolutionized the way many Kenyans work.
Beyond the anecdotes, the numbers tell a significant story. According to Safaricom data, in April 2011 (the latest date for which information is listed), M-Pesa had more than 14 million customers, up from the 52,453 users it had five years ago when the program started. It's estimated that 70 percent of all Kenyan households — and 50 percent of poor, rural households — have M-Pesa accounts, notes e-Argiculture.org, a global organization where people exchange ideas about the use of information and communication technologies (ICT) for sustainable agriculture and rural development.
A Financial Times article published this week, citing stats from a 2010 report from the Central Bank of Kenya, pegs M-Pesa's total transactional value at 727.8 billion Kenyan shillings ($8.81 billion). That's big chunk of money in any currency, and it demonstrates the pent up consumer demand for dependable, technologically-based mobile payments.
As noted in the FT story above and in a recent Afrinnovator piece, security and privacy issues, along with the challenge of replicating Kenya's runaway success elsewhere, cause, justifiably, a fair amount of concern among others moving towards mobile money platforms.
However, despite the potential barriers or instinct to dismiss Kenya's model as non-relevant to the global electronics industry, I think it's important for the high-tech supply chain to realize that best-practices no longer emerge only from the Silicon Valley or other developed-world tech hubs. Dynamic trade interactions and innovative supply-demand solutions are happening right now in some of the most remote and under-developed parts of the world, thanks to various technological advancements and sheer necessity.