Kenya: Mobile Banking


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Kenya today is undergoing a financial boom. Perhaps a surprising fact bearing in mind that the Kenyan Shilling last year weakened 11% and has finally levelled at 102 shillings to the US dollar. 42% of the population live below the poverty line, and youth unemployment is at 17% and rising. Yet despite these desperate statistics, the Kenyan population has begun to enjoy an unprecedented period of financial empowerment. The credit for this does not go to the Kenyan government, or elected official. Rather, it falls at the feet of a handful of entrepreneurs who pioneered the mobile banking scheme, ‘MPesa.’

Initially the flagship idea of Kenyan network provider Safaricom, the concept of mobile banking is built around the pre-existing ability of Kenyan networks to allow transfers of phone credit from one phone to another. This cannot be done in countries such as Britain, and in a nation where a tiny percentage of mobile phone users are on phone contracts, the transfer of phone credit (‘sambaza’) has been crucial in keeping so many Kenyan’s constantly on their phones at all hours of the day. The MPesa scheme took this innovation one step further and created mobile banking; the capacity to have a bank account that it completely controlled through one’s mobile phone. The unique aspect of this is that it doesn’t use the internet; all banking is done directly through the phone network. The innovation that could stem from this scheme is huge, with more Kenyan’s using a mobile phone than have access to clean water and sanitation. Every day, millions of shillings are transferred across the country using MPesa; to pay salaries, bills, remit money back home and to keep savings in a secure account. In a nation where many ordinary Kenyans do not have a conventional bank account, this scheme provides financial security to millions in the country. In a culture where typically cash is simply kept at home, mobile banking has fused the best qualities of modern banking with the needs of many Kenyans who live without access to the internet and are unable to reach traditional bank branches. The result is a secure, fast paced, emancipating concept that has allowed money to move across the country like never before.

So what next for the mobile banking phenomenon and its effect on Kenyan lives? This scheme has proven that even in a nation with rampant corruption and endemic poverty, innovation can crack even the toughest of bureaucracies. It has shown that an entrepreneurial venture can provide for the market in a way in which countless finance ministers have simply failed to do. Ultimately, it has connected the widely spread Kenyan population together. In a nation where tribal divides and socioeconomic inequality run deep and constantly plague society, the MPesa scheme demonstrates that every Kenyan is entitled to the benefits of the 21st Century. It is simply up to us to seize them.