Mobile Phone Banking in Kenya: To the rural Kenyan, Mpesa is the message

Digital divide, the concept that focuses on the world communication connectedness, has identified Africa as the one area that will lag behind in development unless more resources are put into communication technologies. Marshall McLuhan was right, “The media is the message.” The information the West may want to share with Africa is very important, don’t mistake me here. But the fact that Africa cannot afford to buy the technologies necessary for that communication exchange means that the value of cell phones, laptops, modems, fibre optic cable etc. surpass that of the information content.

In this blog piece, I discuss the rather recent evolution of mobile phone banking in Kenya and its effects on society in terms of communication habits and financial freedom. In Kenya, mobile phones were introduced in the year 2000 by Vodaphone Inc. through a subsidiary company called Safaricom. The year 2000 in Kenya was not just a Millennium year, but is remembered as the year that most Kenyans dumped the landline in favour of hand-held mobile telephones at a price they could afford.

Cell phones came with an added facility called “instant messaging.” I, personally, cannot remember anything that I appreciated much better than IM because at the cost of 25 cents, I could send my mother a simple text message from Australia instructing her to collect a few hundred dollars from the local Western Union. Kenyans were so overwhelmed with IM that Safaricom had to increase bandwidth periodically to cope with the demand. Instant Messaging enabled the Mpesa innovation in 2007.

Mpesa is a social banking system that is operated by Safaricom, the largest cell phone company in Kenya. As a cell-phone operated banking system, Mpesa is just one of the features in the cell phone, and is accessible to anyone within the network. The choice of brand name was excellent as “M” stands for Mobile while “pesa” is money in a language called Kiswahili, widely spoken in Kenya. Here, in Canada, one can equate Mpesa ‘s convenience to that of Western Union, but Mpesa takes this convenience a notch higher because its customers do not need to do anything outside their cell phones. All one needs to open a “social bank account” in Mpesa is an account with Safaricom.

What can one do with Mpesa within seconds on a cell phone?
1. Parents can pay school fees for their kids directly into the School Mpesa Account.
2. One can buy groceries in the local store and pay into the store Mpesa account.
3. One can pay employees directly into their Mpesa accounts and the employees can choose to cash or keep the credit to transact business elsewhere.
4. I can send money to my mother’s Mpesa account via a facility recently developed by Vodafone in conjunction with Western Union.

Since 2008, Mpesa has changed from a commercial venture to a social phenomenon. It has become part of the daily lives for most Kenyans. Its effect on Kenyans and the diaspora is the “message” to agree with marshall McLuhan. And in a country where banks charged “an arm and a leg” to open and maintain an account, the trend is changing.

This you tube documentary:

http://www.youtube.com/watch?v=zQo4VoLyHe0&feature=fvw

will show you how Mpesa works from the sender to the receiver and how communities are responding to it. If this is the first time you are watching anything African, brace yourself for culture shock.

Victor Karanja