If you plopped down in any Kenyan city or town these days you’d be certain to see a handful of iconic images: a Coca-Cola stand in the shape of a Coke bottle, a matatu (privately-owned taxi van) packed to the windows with passengers and a sign for M-Pesa. All three are essential components of the Kenyan business landscape, but M-Pesa has global ramifications. The mobile money service operated by Kenya’s leading mobile phone carrier, Safaricom, offers e-commerce, money transfer and banking services to Kenyans that match or better any such services available anywhere else.
M-Pesa and copy-cat services from other carriers have made Kenya a laboratory for experiments with a wide array of mobile financial services. “Kenya is leading the world in mobile technology,” says Louisa Kadzo, editor in chief of the magazine CIO East Africa. “Almost everybody has a mobile phone here, so that’s the way that business can penetrate even to the remote villages.”
Telephone carriers, technology companies, banks, and application developers in the rest of the world would be smart to watch what’s going on in Kenya. Necessity is hard at work and is producing a a flood of inventions at a rapid pace.
M-Pesa (Pesa is Swahili for money) got its start in Kenya in 2007. The technology underlying the service was developed by Vodafone, which has an equity investment in Safaricom, and the service is run by IBM Global Services. Other Vodafone affiliates run services based on the same technology in Tanzania and Afghanistan, and one debuted in South Africa late last year.
The service is popular in Kenya because only about half of the adults in the country have traditional bank accounts, and far less than 10% have Internet access via a computer. As a result, historically, electronic banking and e-commerce failed to get even a toe-hold in the country. Then came M-Pesa.
Its uses are many. People transfer money from one to another–like a mobile version of PayPal. They pay bills and handle real-time payments, such as for taxi service. They make their insurance payments. They buy airtime for their mobile phones. And they deposit and withdraw money.
M-Pesa is by far the mobile money leader in Kenya with a 95% market share, 13.5 million subscribers and 22,000 agents.
We talk a lot at IBM about how the world is increasingly instrumented. In the case of Kenya and its mobile money services, the mobile phones are the instruments–the sensors, if you will–putting all of the power of the Internet at peoples’ fingertips.
Think about the possibilities. As more and more people in emerging markets get access to such services, not only will they be empowered in a variety of new ways; but their activities online will be available for analysis. Companies will be able to understand their desires and create a plethora of new applications. For starters, think micro-credit, salary payments and international money transfers. “The intention is that eventually we can do all of our business on the phone,” says Muriuki Mureithi, president of tech consultant Summit Strategies, in Nairobi.
IBM has a major stake in these applications. In additional to providing outsourced services, its computers and software run many of the core processing tasks for telecom carriers, including new service delivery platforms. Perhaps IBM’s most intriguing play in this area is Spoken Web, technology developed in the research labs in India that makes it possible for people who are illiterate to use voice commands to access information and do business via low-end mobile phones. The technology is currently being tested in Kenya and Nigeria. “There are a lot of possibilities here,” says Tony Mwai, IBM’s general manager for East Africa. “A shepherd can call up and find the market price before he walks 20 miles to sell his flock.”
With these experiments, Vodafone, Safaricom, Airtel, IBM and others are exploring the far reaches of possibility and, finally, bridging the digital divide between those who have a lot and those who have very little.