Tell us about M-Pesa
M-Pesa is a revolutionary mobile money transfer solution that was initially developed by Vodafone and launched in Kenya eight years ago as a Person to Person (P2P) transaction service. Initially, we conceptualised M-Pesa as a tool that would primarily be used by rural women to pay for loans. Over time, we quickly realised that it could be used to transfer small amounts of money between subscribers, and the service was commercially launched in March 2007, enabling them to send and receive money, top-up airtime and make bill payments.
M-Pesa has now become a household name in Kenya and is the most successful service of its kind globally. It has emerged as the most efficient, safe and convenient way to send money across the country, and now, beyond. It has transformed into a products and services facility necessitating the need for us to develop an interface for business to consumer (B2C) transactions.
What would you attribute the success of M-Pesa to?
There are four key factors that you could point to that contributed to the growth of M-Pesa.
First is the fact that the service offered users a safe and quick means of transferring cash across distances, without the need for a formal bank account. This shift meant that consumers would not have to wait for public service vehicles to send money upcountry.They could do it from the comfort of their neighbourhood outlet and be assured that the money would arrive safely and instantly. We can attribute this to the reliability and trust that was formed in our agent network, which now covers 85,000 agents spread across the country.
Secondly, M-Pesa emerged as a cheaper option to send money faster, thereby solving needs within the shortest possible time. For example, if you need to send money to a relative who is sick, you can actually advise them to start their journey to a hospital and before they get there you will have sent the funds.
Third is the dynamism of the product. M-Pesa keeps evolving, and it taps into new pockets of customer needs much faster than any other financial product has been able to in this market.
Fourth would be the fact that Safaricom, and the team that was running the product at the time, were so willing to test this new product and had the passion to see it to its launch. The regulatory environment was extremely instrumental in the growth of the product, as policy makers were willing to observe and oversee the growth of the service and let it grow organically.
Personally, I think the service has grown at the pace that it has purely as a result of the Kenyan spirit. Workers in the cities are typically from rural towns that are quite some distance away. Having a tool that allowed them to meet their familial obligations and securely send money back home is really what gave this product its impetus.
It is said that M-Pesa transactions have an impact on the Kenyan economy. Can you elaborate?
It is true that M-Pesa has had an impact on the Kenyan economy. Allow me to illustrate:
- More than 12.8 million Kenyans use M-Pesa each month for at least one transaction
- There are 85,000 M-Pesa agents in the country who employ thousands more.
- More than 90% of all utility bill payments are made using M-Pesa.
- M-Pesa is the single largest contributing factor to financial inclusion in Kenya. If you remove M-Pesa’s contribution, the level of financial inclusion drops from 70% to under 30%.
How has M-Pesa grown vis-à-vis the Kenyan economy?
M-Pesa has enjoyed double digit growth since it was launched, illustrating that it has been growing at a faster rate than the Kenyan economy.
Has M-Pesa reached saturation point? What new features are in the pipeline to maintain your leadership position in the telecom sector?
Currently, we are seeing an average Sh121.3 billon in real time payments per month, with person to person payments growing by 20%; person to business transfers growing at 64%; and business to person payments growing at 83%. We would like to encourage more growth amongst our active users who currently carry out just over five chargeable transactions per month – so there is still room to grow. We see that growth coming as more businesses start to use our services for individual as well as bulk payments. The overriding benefit for businesses as they join this growing ecosystem is the fact that M-Pesa has numerous benefits over cash and other payment modes, key among them being security, speed of moving cash, and the fact that mobile penetration in Kenya is high.
Have you got operations outside Kenya? What are your plans for expansion?
Safaricom’s M-Pesa does not have operations outside Kenya. We do, however, have strategic partnerships with Western Union and MoneyGram International that have enabled customers to send money directly to M-Pesa customers. There remains a lot of room for growth in Kenya, particularly given that 9 out of 10 transactions in Kenya are still made using cash.
(Under the Vodafone brand, a similar mobile money transfer product is offered in Egypt, India, Lesotho, Mozambique, Romania and Tanzania)
Have you been able to replicate the success that you achieved in Kenya?
Kenya pioneered in the launch and adoption of M-Pesa globally. Kenya’s case has, therefore, been the benchmark in the rollout of M-Pesa in other countries, bearing in mind that markets may be different.
What attracted you to Safaricom?
When I joined in 2010, I was attracted by the challenge that it presented as a mobile business that was entering the second phase of its growth in a market that was maturing. I continue to be amazed at how transformative the company is on a daily basis and the opportunity for new facets of growth that are so ripe in this market. There are great prospects for our business in Kenya, and I am privileged to be part of the country’s continued journey towards becoming a world leader in mobile innovations. At the end of the day, what drives me and the rest of the more than 4,000 employees at Safaricom is the desire to transform lives through everything we do.