Remaking Mobile Money in Africa
When Safaricom launched M-Pesa in Kenya in 2007, nobody really had an inkling of just how massive it was going to be. What started out as a simple means of repaying microfinance loans through a mobile phone soon became a full-fledged digital payment revolution.
Background
In Kenya—and in much of Africa at the time—there weren’t millions of individuals with access to traditional banks. The majority of individuals bartered in cash, which was insecure, tedious, and hard to move around in, especially over long distances. Safaricom found a huge gap and plugged it.
M-Pesa made sending, receiving, and saving money through even the most basic of mobile phones possible—no smartphone or internet needed. It used plain SMS and USSD codes, which could be accessed by almost anyone who had a phone.
Why It Worked?
It was open to everybody: You did not need to have a costly phone in order to use it. Even basic phones could handle it, which made it very inclusive.
Friends you could rely on: Safaricom developed an enormous network of local agents to enable cash-ins and cash-outs. They were familiar faces in the community, which generated trust.
It seemed more secure: Cash was not a good thing to be carrying around. With M-Pesa, money was attached to a mobile PIN—safer and more secure.
It grew bigger: M-Pesa didn’t stop at mere transfers. It grew to include bill payments, saving, loan borrowing, and even remitting money abroad.
Innovation does not necessarily mean "high tech." Sometimes, it is simplicity that drives mass adoption.
The Effect
Over 51 million Kenyans, Tanzanians, and others now depend on M-Pesa. It has helped families pull themselves out of poverty and given small business owners the tools to scale up their ventures. The World Bank even credits mobile money services such as M-Pesa with jobs gains, enhanced rural livelihoods, and empowered communities.
Lessons for Fintech Ventures
Solve a genuine problem: M-Pesa succeeded because it was solving something that really mattered—no banking.
It doesn’t need to be cutting-edge technology: Sometimes the simplest solutions are absurdly simple.
Build a strong network: By partnering with telecoms, local agents, and banks, M-Pesa established a robust system that worked.
Be nimble: The platform itself evolved over time, adding loans, insurance, savings—whatever was necessary next.
