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19 October 2007 (Updated 12 February 2008)
M-PESA: 1 million Kenyans bank by phone
Vodafone
subsidiary Safaricom have now signed more than 1.6 million customers in Kenya for
their mobile phone banking service, M-PESA, in the first year of operation.
M-PESA (which in Swahili means ‘mobile money’) is a fast, safe and affordable way to send and receive money through mobile phones without the need for a bank account.
DFID helped set up the pioneering service by matching Vodafone’s investment
of £1 million, through the
Financial Deepening Challenge Fund, to pilot M-PESA in
Kenya. Nick Hughes, Global Head of International Mobile Payment Solutions at
Vodafone, says that without DFID support he would not have been able to convince
Vodafone to invest in the venture. With no joining fee, monthly charge or
minimum balance required, the ‘pay as you go’ M-PESA service has facilitated
$38 million of mobile phone banking transactions and has now become so popular that
2,500 people are signing up every day to be able to send and receive money.
M-PESA targets poor customers, who until now have been excluded from formal bank networks, due to their remote location and small transaction volumes. With more than 46% of the population living below the poverty line the introduction of M-PESA may have huge developmental benefits for poor people in Kenya.
Vodafone have recently launched a trial with CitiGroup to enable international remittances to be sent from people in the UK to friends and relatives in Kenya by mobile phone. Vodafone are also working with the Social Protection Payment Challenge Fund to determine whether M-PESA could be used to distribute social payments to poor families in remote areas.
