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Time to meet the real M-PESA?

m-Pesa? m-PESA? mPESA? MPESA? mpesa? Putting the actual spelling to one side for a moment, there can be few more talked about yet least understood mobile services than M-PESA (yes, that’s how you’re supposed to spell it. I think). Misunderstanding, misinformation and, in some cases urban myths abound – everything from its roots and implementation to the percentage of Kenyan GDP now passing through the service. Despite this, M-PESA has come to dominate discussions in the ICT4D and m4d communities (despite arguably not being a development tool at all. But that’s another debate).

M-PESA has become so dominant, in fact, that we’re now at the stage that in increasing numbers of meetings, workshops and conferences I attend, any talk of it is banned.

M-PESA is an undeniable Kenyan success story, but not for the reasons many people think. The technology component of M-PESA was developed far away in Cambridge, England (my home town) with UK Government and Vodafone money. M-PESA is not a Kenyan or African innovation if you measure it in technology terms. But technology is often the easy bit, and what does make M-PESA a Kenyan success story is its implementation. Key ingredients like graft, determination, luck, naivety and a receptive population starved of any meaningful access to bank accounts or financial services created a perfect storm for the launch of the service. A storm, let’s remember, which is yet to hit other countries with the same intensity, many of whom have struggled to adopt M-PESA or related platforms as successfully. So far, anyway.

The very idea for M-PESA is also disputed. Despite the technology being developed in the UK, some believe that it was indeed a Kenyan who had the original idea. This “Is M-Pesa really Kenyan or British?” post on humanipo goes into a little further detail. You could argue that none of this really matters, of course. Another debate.

On top of all that, barely a week goes by when my Twitter stream isn’t hit with a claim that 10%, 25% or even 50% of Kenya’s GDP passes through M-PESA. The number – whatever it is – is astonishing. The one I’ve quoted more recently is “50% by the end of 2013″ – heard at a conference in Amsterdam last autumn. I have no idea whether it’s right or not, but going by the percentage range in the tweets very few other people are either.

If, like me, you think it’s time to debunk some of these myths and inaccuracies and get the inside story of how M-PESA came about, then we’re in luck.

A couple of weeks ago Chris Locke, Managing Director of the GSMA Development Fund, gave me a copy of a book I didn’t know existed. “Money, Real Quick: Kenya’s Disruptive Mobile Money Innovation” is a great read if you’re one of the few people new to M-PESA, or you’re one of the majority who thought you knew it. The book covers everything from the seed of the idea, the importance of the human network of M-PESA agents (often forgotten in the technology-dominated discussion), what mobile money means to Kenya’s finance and banking industry, it’s impact, and what the future may look like. The book also touches on innovation more broadly, and how M-PESA speaks of the new-found appetite for innovation in the country.

I’m not sure if this book did come out in 2012 as Amazon claims, but regardless it’s incredibly useful if you think, after six years, it’s time to meet the real M-PESA. If you do you can find it on Amazon here.

10 comments

1 Time to meet the real M-PESA? | Global Health Hub: news and blogosphere aggregator { 01.23.13 at 2:38 am }

[...] Follow this link: Time to meet the real M-PESA? [...]

2 John { 01.23.13 at 1:50 pm }

Yeah, it definately came out last year. Originally it was a e-book only, and I bought my copy in April 2012.

The GDP number is misleading – GDP is a measure of wealth creation, rather than money flow. Money transiting through M-Pesa has no impact on GDP, although it may be facilitating it.

3 Gabriel { 01.23.13 at 2:53 pm }

It was 20% of GDP at the end of 2010, according to calculations I did for the World Bank’s Kenya Economic Update in December of that year.
http://siteresources.worldbank.org/KENYAEXTN/Resources/KEU-Dec_2010_with_cover_e-version.pdf

M-PESA has continued to grow and I believe transfers now are equivalent to over 30% of GDP.

4 kiwanja { 01.23.13 at 5:25 pm }

@John – Thanks for that. I think when they quote that number they’re simply indicating how widespread the use of M-PESA is, rather than implying it’s generating/increasing GDP.

5 Terence { 01.23.13 at 5:54 pm }

The UNCTAD (2012c) study focusing on the EAC notes that some M-PESA agents perform informal cross-border mobile money transfers between Uganda and Kenya. Also, Western Union has already integrated its system with a number of mobile money platforms in the EAC in order to allow international remittances to be converted and credited directly to a user’s mobile money account. At present, this movement is only one way and the service is currently operational on M-PESA in Kenya and MTN Mobile Money in Uganda. Clearly, this reflects potential nascent demand for mobile money remittance services, and could help facilitate growth in cross-border mobile money transfers and regional trade within the EAC. In addition, similar cash-in and cash-out mobile money transfer services are being established in other LDCs such as Bangladesh (Banglalink), Burkina Faso, Madagascar, Samoa and Tanzania. I am particularly interested in this development as I am sure it could enhance P2P credit finance for the un-banked and rural poor.

6 kiwanja { 01.23.13 at 9:24 pm }

@Gabriel – Thanks for clarifying that. Sounds like 50% is a little ambitious!

7 klynt { 04.17.13 at 10:03 am }

that a true lie your saying there at least give the gratitude to the Kenyans who deserve it

8 kiwanja { 04.17.13 at 1:03 pm }

@ klynt – Sorry, which bit don’t you agree with?

9 Mike { 06.01.13 at 11:25 am }

It is so retrogressive to still believe that nothing good can come out of Africa. I find this post so funny-that one has to look for funny theories aimed at distancing the innovation from Kenya. M-pesa will live to be a Kenyan story, simply because it could only work in Kenya. Give to Ceaser what belongs to Him. Africa is on the rise, the M-pesa story is just a tip of it and whether they ban it in meetings and stuff, the Kenyan star will continue to shine. I blog at billionaresonline.blogspot.com/

10 kiwanja { 06.02.13 at 7:52 am }

@Mike – I don’t think you’ve read the post all the way through, because it says nothing about “nothing good coming out of Africa”. I think the sentence “M-PESA is an undeniable Kenyan success story” says it all. If you doubt that M-PESA was developed in the UK then perhaps buy the book – details are in the post.

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