The rise and rise of Mpesa in Kenya's economy

It would suffice to say 2007 was a pivotal year for Kenya and its people.

 It is the year that telco giant Safaricom unveiled its new mobile money product, Mpesa, which revolutionised Kenya’s financial landscape. This new change shifted our money habits and built a stronger trust in technology, which started moving the nation into a cashless economy. Indeed, Mpesa has become a colossus in the financial sector.

One of the biggest employers in Kenya is the bodaboda sector. With over 2 million men and women operating in the sector, it remains one of the most liquid and active parts of the economy, coming in strongly to meet the high demand for convenience in movement and quick deliveries at an affordable rate. As I hand over a Sh500 shilling note to pay for a bodaboda trip, James Mwangi, an operator in the sector, tells me he has no `change`. “Is it possible to send me on Mpesa?” Mwangi asks.

When I inquired why he does not have the needed balance, he asserts that the majority of his clients pay through Mpesa instead of cash. He confirms that most of the time, he operates without handling cash.

After alighting from the bodaboda, I get into a 14-seater matatu to head to the Nairobi Central Business District. Unlike the old days, this matatu has no conductor who would collect fare from the passengers. Being the last one in, I get the back seat in the relatively quiet matatu. Ten out of the fourteen passengers have their earphones on and are on their phones. Pinned at the board separating the passenger and the driver side is a Pochi La Biashara number. Once we get to our destination, the driver opens the matatu door and the majority of the people show him the payment confirmation message on their phones.

At Afya Centre in Nairobi, a stage that serves a good number of shuttles on different routes across the country, Patrick Asese is busy assisting customers who are heading to Wote to board the vehicle. He has been in the matatu business for thirty-one years. “Back in the day we used to carry a lot of coins, so, customers would always need `change` or balance,” he says, “but since we had this mobile money, they pay directly to MPesa which reduces disagreements and a lot of back and forth between customers and conductors.”

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A few meters away, Danvas Nyamamba, the secretary to Transliner Galaxy shuttles, is finalizing books for trips to Nyamira County. He reminisces on how sending money was very different prior to Mpesa. “For me to send money to my wife back at home, I would look for a neighbour who’s heading there to take the money to her,” he remembers, “or my wife would have to look for a person with a bank account, give me the account so that I can deposit money in there.” He confirms that it is no longer the case as he uses Mpesa to send money directly to his family.

Charles Gatimu has been driving for 9 years in one of the leading bus services in the city. He says the adoption of mobile money has made business easier for them.

“With daily targets to hit, sometimes a conductor would tell you that some money dropped from their pockets and other excuses, which brought friction at work. Now all we do is check the MPesa and all the transactions for the day,” he says. Gatimu`s conductor, Bernard Omambia, tells me the challenge with getting balance has reduced. “Some customer is going a short distance but hands out a big denomination. Imagine trying to get thirty bob from a thousand shillings,” says Bernand. “Our security was also of concern since we would encounter some thugs who would do away with cash. Now with MPesa, even if they take my phone, they cannot access my account.”

It is the ease of transacting money that has made business easy for Mary Chege, a small-scale trader in Bisil, Kajiado. Dealing in groceries, she says she has to source them from Marikiti Market in Nairobi. “I do not have the luxury to go all the way to Nairobi, but I can pay through Mpesa for my products and transportation and within no time, it is here,” says Mary.

Mpesa has been pivotal in empowering small-scale traders who dominate the business landscape in the country. Victor Odada, the head of payments at Safaricom, says that Mpesa has brought financial discipline and structure to these small businesses. “If you`ve noticed, a lot of MSMEs are run by individuals where they use their account to do business. Now, with Pochi La Biashara, which separates their money from their business money,” says Odada.

Odada notes that this record helps the entrepreneur to get a statement which could be used to get credit.

Odada says, “We`ve also developed a credit solution for Pochi. The more you transact on Pochi, we give you a credit line, which helps the business grow. With the growth, we can now migrate you to the Lipa Na Mpesa proposition, which is for full-fledged merchants.”

The use of Mpesa has seen the age-old barriers to financial inclusion come down. Juliet Samba, an Mpesa operator in Kisumu, has noted that the elderly, who receive support from their families or the Government, find it easy to get their cash through the mobile money transfers. “Many of the elderly would lose money courtesy of dishonest people, some even conned or robbed them. Now with mobile money there is a level of safety with receiving the money and also using it,” she says.

Through Mpesa Go, the youth, especially minors, have been onboarded on the financial service platform. “The beauty about Mpesa Go is that the parents are still in control, but the children are taught how to pay and interact with money,” says Victor Odada, the head of payments at Safaricom.

With studies showing that when women have more money, they are more likely to save and invest in their families, mobile money has been a critical tool in boosting their financial inclusion. “Our money Market product, Ziidi, is targeting women and women groups. This will allow them to invest and make money, "says Odada.

Where Mpesa is going next is more and more customization around lifestyle. “We call this hyper-personalization, where these products will be about making your quality of life better,” confirms Vincent Odada, the head of payments at Safaricom. In 18 years, MPesa has eased person-to-person transactions in Kenya, powered business transactions and now is enabling the global movement of money, easing regional and global trade.