PLANNING AND LEADERSHIP FOR A BETTER WORLD
PLANNING AND LEADERSHIP FOR A BETTER WORLD In America, people can use their cell phones to play games, watch videos and take photos. In Kenya, people can use their cell phones to withdraw cash, send money, buy goods and pay for a taxi ride.
Mobile money has caught on big in Kenya, and it's bringing a small revolution to everyday life in this country where many people do not use a regular financial institution—and fewer than 10 percent have everyday access to the Internet. Logging in to an e-bank account to transfer funds is not usually an option.
The popular service leading the way is called M-Pesa (pesa is Swahili for "money," and you know what the M stands for). Here's how it works. A subscriber goes to an M-Pesa kiosk (there are 22,000 in the country), where she can add money to her PIN-protected M-Pesa account, withdraw money or transfer money to a kiosk elsewhere in the network. Text messages are used to deliver transaction information.
Many Kenyans use the service's transfer feature to send money to family members out in the country, where there are no bankers but there are M-Pesa agents. This is one of the most significant aspects of this service: It can potentially boost economic activity and opportunity in regions that desperately need it.
A research study has found that 41 percent of M-Pesa subscribers send money to parents. Otherwise they'd have to use the traditional methods: send the cash by mail—typically in a disguised package—or ask a friend or relative to carry it with them when they go to visit. A Kenyan-born researcher who is doing a study of M-Pesa told MIT News: "You might send money with a bus driver and it wouldn't get there, because he might get robbed. Now it gets there within five seconds, as soon as it takes a text message to arrive."
In an interview with NPR, a restaurant cook near Nairobi who earns about $4 a week explained that he cannot afford the charges levied by a bank account, so he has his paycheck deposited onto his M-Pesa cell phone. He then uses his phone to pay his rent and to send money to his mother's cell phone 600 miles away; she then goes to an M-Pesa kiosk to withdraw the cash.
M-Pesa was started up by a socially conscious group at Vodafone and is operated by Safaricom, Vodafone's affiliate mobile carrier in Kenya. The system's underlying technology platform is run by IBM Global Services.
The developers of the system had to design software that would work with the simplest mobile phones. (Smartphones are extremely rare in Kenya.) The interface proved to be one of the biggest challenges. Phone menus and SMS response messages could consist of no more than 160 characters. That was no problem with the English screens used during the project trial. But getting the Swahili version of these messages to fit into that space was not easy. As project manager Susie Lonie put it, "By contrast, English is a very compact language."
M-Pesa has been a big hit in Kenya. At last count, nearly 40 percent of households included someone with an M-Pesa account (compared to 22 percent of adults with bank accounts). Recently versions of the mobile-money system have been launched in Tanzania and Afghanistan.
"Technologies such as mobile phones are one way to overcome some of the obstacles that block the poor from having access to financial services," Ignacio Mas, deputy director of the Financial Services for the Poor Initiative at the Bill & Melinda Gates Foundation, says. M-Pesa and its creators have accelerated what economists call "the velocity of money" to locations where there are no banks or financial infrastructure—and that's no small change.
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