Mobile payment and Banking system- The case of “Kenyan success ” vs Disappointment in Haiti

I  have followed closely how the aid agencies including US Government and and the Bill & Melinda Gates Foundation have struggled to get the mobile money ticking in Haiti in the aftermath of the devastating earthquake. The project which was meant to bypass the banking system is not doing well at the moment and everyone is wondering why. As i have said before for mobile money to succeed in many parts of the world people need to understand what has made Mpesa success in Kenya.  Particularly, there is need to understand the marketing strategy used in the formative stages of Mpesa. M-PESA is a small-value electronic payment and store of value system that is accessible from ordinary mobile phones… for those who still don’t know

As I look around, I have realized that some people think that the issue with the places like Haiti is the literacy rates. Haiti has literacy rate of 50 percent of the adult population compared to Kenya which has 90 percent of the adult population. On the surface that might seem to make people believe that the education is the main problem.  Take for example the post on “overselling mobile money in Haiti”

Literacy rates can proxy for technological literacy, and in Haiti only about half of the adult population is literate. Unsurprisingly, more than 60 percent of early mobile money adopters had at least a secondary education.

One of the first and most successful mobile money services, known as M-Pesa and also funded by the Gates Foundation*, started in Kenya in 2007. Seventy-three percent of Kenyans use mobile money, which has eased transferring and storing of money for millions there. Yet in stark contrast to Haiti, almost 90 percent of Kenyan adults are literate. And reporting on M-Pesa in 2010, The Economist noted a few of the disparate elements required for mobile money success: “the right technology, simple marketing, partnerships with banks, support from regulators.”

I think the literacy theory misses the point on how Mpesa became successful in Kenya. In Kenya it started as a way to send money from the urban centers to rural areas by the working class in Kenya. The tag line was simple ” send money home”.  Majority of the rural folks did not understand or buy  the whole concept completely but those residing on Urban centers particularly in  Nairobi had a pressing need. They needed easier way to send the money back to their relatives in the rural areas having been failed by the mainstream banking system and other money transfer agencies. Before  I move further on this I need to note that only around 20 percent of Kenyan adult population live in the urban centers. So it was upon the urban folks to explain to their relatives the importance of using the mobile money transfer. In fact from the beginning, there was no restriction of having to be a subscriber to receive the money. Non subscribers could walk in and show the Mpesa agent an sms received from the Safaricom indicating that they have received the money from someone. And that was good enough. The essence of receiving money from the relatives in the urban centers helped the rural folks to embrace Mpesa. Later on, they found out that they can use it as a bank, doing the saving and other aspect of banking system.

To help drive the rate of subscriptions, Safaricom (Mpesa) charged higher fees for sending money to non-subscribers. For example to send Ksh.1000 (around $12) to Mpesa subscriber one is charged Ksh.30 (  $.0.35) while to send to a non-subscriber the charges are Ksh.75 ($.0.88). With that, many people advised the people they are sending money to become subscribers..

From that you can see that small section of the population believed on the mobile money and helped  on its growth. With 50 percent literacy rate of the adult population in Haiti , Mobile money can still be a big success with right marketing strategy.

I believe Mobile banking and money transfer is the is the way to go for many developing countries to tackle the problem of the mainstream banking system. According to data released by World Bank about 75% of adults worldwide earning less than $2 a day don’t have a bank account. The data collected by Gallup Inc. for the World Bank Global Financial Inclusion Database, showed that more than 2.5 billion people around the world don’t have a bank account.

The report indicated a number of reasons  for this sad state of affairs including  poverty, the cost, travel distance and amount of paper work involved in opening bank  account.  The bank is look at as a complex thing with a complicated procedure and timeline.

In Kenya mobile payment and banking system has fundamentally transformed Kenyan financial sector  and changed the entire economic system. It is simple and easy, people can cash in and cash out from their M-PESA account at any time. The main attraction of Mpesa is that it gives a simple solution to the restrictions and problem of the traditional  banking system.

According to the latest report by Communication Commission of Kenya there are 18.9 million mobile money transfer subscribers in Kenya. That is almost a half of Kenyan population which stood at 38 million according to the last census done in 2009.  Within the same report there are 47,997 Mpesa agents across the country, that is about 50 times the number of the branches of  the entire banking system.

Note: Part of this article was originally published on the


Kennedy Kachwanya1080 Posts

--- Kennedy Kachwanya is a technology blogger interested in mobile phones both smart and dumb, mobile apps, mobile money, social media, startups ecosystem and digital Savannah. New media must not forget the strength of old tech.


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