Archive for: Kenya

Our friends at Microfinance Podcast have just posted this interview with Nick Hughes, who has been instrumental in getting M-PESA up and running.

Nick was at an event we did in Washington and you can watch that here.

photo courtesy of Olga Morawczynski

Last month, I described an observation on usage that came from my ethnographic fieldwork. I noted that money flows reversed during the post-election violence in Kenya. That is, urban migrants were receiving money and airtime from their rural relatives. M-PESA has also generated a variety of impacts to the daily lives of its users. One of the most significant will be described in this week’s blog. That is, changing remittance patterns.

Users began to make transfers “in bits”, remitting smaller amounts of money more frequently.
A significant change to remittance patterns was noted during the fieldwork, especially during the latter stages. Money was being remitted “in bits”. That is, smaller amounts of money were being sent with greater frequency. A shoe maker in Kibera explained:

“Before M-PESA, I used Posta [post office] and would transfer money at month-end. Now I send the money in bits. I send every week. Sometimes I send twice in a week. It is cheaper for me to send with M-PESA…so I can send more times.” Read the rest of this page »

It seems like every week there’s a new market study that comes out about mobile banking – but few of those (if any) focus exclusively on the opportunity to be found in serving poor, unbanked people in developing countries.

So, with our friends at the GSMA, we thought we’d share a preview of the upcoming results of the CGAP-GSMA Mobile Money Market Sizing Study, which includes:

• a projection of the unbanked poor who could be reached globally by 2012;
• an in-depth look at unbanked mobile money users in the Philippines today;
• and a survey of more than 40 operators, vendors and other industry actors.

The aim is to help mobile operators drive initial adoption and progress towards more sophisticated offerings, such as savings and credit. Some highlights after the jump….

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Olga Morawczynski is a doctoral candidate at the University of Edinburgh and has spent more than a year investigating customer adoption and usage in both urban and rural Kenya. Today she begins a series of occasional blog posts based on that work.

During the coming weeks, I will post a series of blogs. These will describe observations made during my fourteen month ethnographic fieldwork. Such fieldwork focused on understanding the adoption, usage and impact of M-PESA in two low-income communities. It began in an informal settlement on the outskirts of Nairobi called Kibera. The money trail was thereafter followed to a small village in Western Kenya called Bukura.  This blog will reveal the first observation, which is on usage. Read the rest of this page »

Starting today and running through the 2009 Mobile Money Summit, we begin a podcast series with some of the voices we’re listening to this year as part of the CGAP/DFID Branchless Banking in 2020 scenarios work. The process is based on one driving question: How can government and private sector most affect the uptake and usage of branchless banking among the unserved majority by 2020? You can participate directly through this blog,  by joining our prediction market, or posting discussions through our Mobile Banking and Microfinance LinkedIn Group. –Jim

Claire Alexandre has advised Vodafone Group and its subsidiaries on regulatory issues related to mobile payment and money transfer services over the last six years. She has led Vodafone’s contributions to new EU legislation (including on electronic money, anti-money laundering, payment services) and been instrumental in shaping and representing the views of the mobile industry on these subjects. As part of the team leading Vodafone’s effort to launch mobile payment and money transfer services such as M-PESA, Claire is managing Vodafone’s input to financial services regulation to promote the adoption of enabling regulatory frameworks. Prior to joining Vodafone’s Public Policy team in 1999, she managed regulatory affairs for France Telecom in Scandinavia. I spoke with her at a recent scenarios workshop held in Capetown, South Africa.

Interview with Claire Alexandre

To promote effective regulation of mobile banking, CGAP, DFID, and the Alliance for Financial Inclusion (AFI) have organized this week’s second Global Leadership Seminar for high-level policymakers and regulators who set policy for branchless banking, including mobile banking. CGAP’s Technology Program and AFI are supported by the Bill & Melinda Gates Foundation.

The proper role of nonbanks in branchless banking bedevils regulators and industry alike. The central bank of the Philippines just released new regulations creating an e-money license. In recent months, Kenya has seen a wave of complaints from banks about the success of Safaricom’s M-PESA service and whether or not it constitutes un-regulated banking. Regulators in some countries — India, prominently — have made clear statements that banks should take the leading role (for example, see RBI’s mobile banking guidelines).

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Today we welcome Denise Dias as a new blogger for the CGAP Technology Blog. Denise works on policy and technology issues. Before working with CGAP, she was employed by the Central Bank of Brazil most recently as a bank examiner and previously as a senior advisor for the licensing department. –Jim

A meeting at CGAP yesterday made me think about a recent blog from Mr. Hannes von Rensburg, founder and CEO of Fundamo. He believes regulation is not a barrier for mbanking projects around the world and to bank the unbanked. Does he have a point? Yes, he does. First, the “regulatory barrier” is the easiest scapegoat for nonbanks (read mobile network operators) that are not used – or willing – to negotiate with financial services providers and deal with prudential regulators. Regulation will not be an insurmountable barrier to a variety of branchless banking models in many jurisdictions. Providers (banks AND nonbanks) will probably find a workable solution with financial regulators by agreeing upon minor regulatory changes or alterations in the proposed business model. Second, there are other major obstacles for branchless banking to take off, such as finding the balance between profitability, client adoption/usage, and security.

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Last week was the gigantic GSM Mobile World Congress in Barcelona. At the Mobile Money Forum, optimism ran fast and deep. That tone was a refreshing break from the steady tide of gloom and doom in the financial press. Safaricom won another award for its M-PESA mobile money service, which has now signed up over 5 million Kenyans.

There was also lot of congratulations for making it possible for people the world over to buy airtime in amounts as little as 5 cents from literally millions of sellers in the smallest villages. One commentator called it “the cheapest, biggest, most powerful sales channel in human history.” The mobile industry thinks they have a huge advantage in delivering financial services cheaply.

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Olga Morawczynski is a doctoral candidate at the University of Edinburgh and a co-author with Mark Pickens of a forthcoming CGAP Focus Note on M-PESA. She has spent more than a year investigating customer adoption and usage in both urban and rural Kenya. Olga spoke at the Mobile Money Forum at the GSM World Congress in Barcelona earlier today.

Martin is a shoe-maker in Kibera, an informal settlement outside central Nairobi. He has set up a small stall along Kibera drive, the main entry point into the informal settlement. From this stall, he sells and repairs shoes to earn his “daily bread”. Martin lives alone in Kibera. His two wives and eight children live in his rural home, which is located in Western Kenya.  Martin explains that a large segment of his earnings is sent “back home” to his family. He continues that he usually transfers money on a weekly, or bi-weekly, basis.  He then holds up his mobile phone and explains that he always uses M-PESA to make such transfers.

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Just as the M-PESA mobile money service hits 5 million registered clients in Kenya, it’s encountering a wave of attention about its regulatory status. The tide of critique has been rising, as we highlighted last month. The rub is with Safaricom’s regulatory status. Some say M-PESA’s lack of status as a bank puts customer funds are at risk. This recent article from the East African Standard concludes M-PESA “could be a disaster waiting to happen.” Kenya’s Finance Minister ordered an audit of M-PESA and is on record with the Standard saying, “I am not sure M-PESA will end well. We want to protect wananchi [citizens] from the sharks who want to make money from the misfortune of others.”

The Kenyan media contains alternate voices that are much more sanguine about M-PESA’s safety. They highlight that M-PESA is a money transfer service, rather than a bank, which implies it should be regulated differently. This article from the Business Daily recounts the widespread belief that much of the pressure being piled on Kenyan regulators originates from a banking sector which sees M-PESA as encroaching on the financial service space. As John Walbengo, an IT Lecturer at the Multimedia University College of Kenya tells the Business Daily: “The chief suspects… would obviously be the 48 commercial banks whose total and national customer base is only one-tenth of the four million M-PESA customers that Safaricom controls.”

The Business Daily also cited CGAP. The paper reported - incorrectly - the numbers of daily transactions for M-PESA and Equity Bank, Kenya’s largest commercial bank, also with a track record of reaching many ordinary Kenyans. The right numbers, as we released in December at a mobile banking roundtable, are M-PESA, 160,000 P2P transactions per day; and Equity 118,061 m-banking transactions per day.