Mobile Innovation Kenya

M-Pesa and Financial Inclusion

KenyaEast African CountryPopulation: appox. 44,000,000More than 60% of the population is under 25 years old.More than half of the population lives below the poverty line.

Mobile Phone in KenyaMobile phone services were introduced in Kenya in the mid 1990’s.Safaricom, Kenya’s dominant mobile service provider, started its operations in 1997.By 2001, mobile subscriptions surpassed landlines.By 2013, mobile penetration has surpassed 75% with a over 31 million subscriptions.More Kenyans have access to a mobile phone than they do to clean drinking water, electricity and bank accounts.Cheap mobile phones, from China, are being sold for as little as $20 US.

Kenya Vision 2030, lists the Kenyan government’s development goals from 2008 to 2030. One of these goals is to increase financial services to the poor. These services would include such things as formal banking, savings, credit and pensions.

This presentations is about financial inclusion and how the emerging mobile money market is helping Kenya reach their development goals.

Financial Inclusion

M-Pesa: Mobile Money

M-Pesa was launched as a mobile money transfer service in 2007. Its original intent was to help microfinance loan recipients pay back their loans with more ease and help urban workers remit money back home to their villages.

After the first year of business, it had 2 million active users.By March of 2013 it had reached 17 million users!Kenya has become the world leader in mobile money transfers.More mobile money transfers happen everyday in Kenya than Western Union does globally!

M-Pesa: How it Works

M-Kesho was launched in 2010 as a joint venture between Equity bank and Safaricom.M-Kesho is a mobile banking.M-Kesho was added to the user interface on the M-Pesa menu.

M-Kesho signed up 650,000 customers within the first 6 months.M-Kesho also offers emergency credit and microinsurance.Users can open an account with as little as $1.25 and still earn 1% interest.M-Pesa transaction history over 6 months service as a credit history for M-Kesho users.No fees to deposit.Transaction fee for withdrawals.

M-Kesho: Mobile Banking

Mbao: Pensions for the Poor

M

Mbao Pension Plan was introduced in 2011.Its purpose was to encourage the poor informal working class to save money. Contributions can be made through two mobile platforms, M-Pesa and ZAP.

Non-Profit: GiveDirectly

GiveDirectly was founded by four American University students who recognized the potential to transfer money directly to the poor in Kenya through mobile services.Money is given and the effects of unconditional cash transfers are studied; recipients can spend it however they want.

Recipients receive $1000 US over a period of 1 – 2 years.Donations are transferred from GiveDirectly’s M-Pesa account to the recipient’s M-Pesa account.If the recipient doesn’t have a mobile phone, GiveDirectly gives them one.GiveDirectly has made the ‘top 3 charities’ list for charity evaluator, Give Well.Awarded $2.4 million by Google to expand into other countries.

Ushahidi

One of Kenya’s most successful mobile innovations is Ushahidi.Ushahidi was created in two days by a group of bloggers and software developers after the post-election violence in 2007-2008.Ushahidi is used to crowd-source information in crisis situations.

Ushahidi is a mashup that pulls data from Twitter, email, SMS, Google Maps and OpenStreetMap.Ushahidi enables users to share reports and to see mapped data in real time.Ushahidi is now being used in over 159 countries and has been translated into 35 different languages.

Mobile Start-ups are creating opportunities and transforming lives.M-Kazi is a mobile application for job recruitment.M-Farm provides farmers with up-to-date prices and farming trends.M-Maji helps the poor locate water and gives them details as to price and quality.M-Changa is a crowdfunding application.M-Prep is mobile learning for K12 students.iHub is a Nairobi’s tech innovation hub.

Government InitiativesThe Kenyan national government sees the ICT sector as one of the pillars to realizing its development goals. A new undersea fiber optic cable is being deployed on the Eastern Coast of Africa. Konza tech city, a $14.2 Billion project, is being built near Nairobi. The government is rolling out a program to provide every child with a laptop when they enter school.

ConclusionFinancial Access Surveys show incredible gains in financial access from 2006 (The year before M-Pesa’s launch) to 2013.

Huge improvements in internet connectivity may further increase access to financial services. There was 4.3 million smartphone users by the end of 2013. 80% of those that access the internet are doing it through their smartphones.

Whether Kenya will reach its 2030 Vision goal of being a middle income economy remains to be seen, but the country may very will reach complete financial inclusion of all of its citizen if it maintains its current pace.

“Consider the success of mobile banking, which offers a way for people on the low end of the economic scale to leap into the world of modern finance without having to build a single bank. With an M-Pesa ‘electronic wallet’ a Kenyan can use his cell phone to pay for a ride in a taxicab, a service that is not available in the West. Since 2007 the number of Kenyans who keep money in a bank has risen from one in five to one in two, thanks in large part to M-Pesa. The increase in bank savings could serve as a new pool of money to finance the building of roads and other critical infrastructure, and its potential to grow is huge.”

Ruchir Sharma, Breakout Nations

Sources:

● Kenya Demographics● Kenya Vision 2030● M-PESA: Mobile Money for the “Unbanke

d” Turning Cellphones into 24-Hour Tellers in Kenya

● 10 Things You Thought You Knew about M-PESA

● M-Pesa Timeline - Interactive● Money, Real Quick: The Story of M-Pesa● M-Pesa Mobile Money Video● M-KESHO in Kenya: A new step for M-PE

SA and mobile banking● M-KESHO Account Brochure● Extending Pension and Savings Scheme

Coverage to the Informal Sector: Kenya's MBAO Pension Plan

● GiveDirectly● Give Well Top Charities● Can 4 Economists Build the Most Econo

mically Efficient Charity Ever?

● What is Ushahidi? ● Ushahidi, or 'testimony': Web 2.0

tools for crowdsourcing crisis information

● Mobile Phone Usage at the Kenyan Base of the Pyramid

● Peter Day Global Biz Podcasts on Mobile Money in Kenya

● Konza City● Financial Access National Surve

y 2013● Poor People Using Mobile Financ

ial Services: Observations on Customer Usage and Impact from M-PESA

● Breakout Nations