Tracking M-Pesa’s 15-year journey of enriching lives

Fifteen years ago, Safaricom and Vodafone mobile companies invented M-Pesa, the world’s first mobile money transfer service, that has gone on to become a pacesetter in the world of digital economy.

Such was the transformative impact of M-Pesa that in 2015, while on a Presidential trip in Kenya, the former US President, Barack Obama, lauded the the innovation noting that it was a great idea for the world of business.

“Every day around the world, millions of people send and save money with M-Pesa, and it’s a great idea that started here in Kenya,” Obama said.

A decade and a half after its birth, M-Pesa has grown in leaps and bounds, going through one phase of transformation after another, and evolving from a simple mobile money transfer to a semi-bank, which can lend and save, thanks to its Mshwari and Fuliza additions. It has also inspired mainstream banks to jump into the fintech bandwagon. And Across the globe, techies have tried to replicate the invention in their respective spaces with limited success.

The success of M-Pesa is underlined by its mind-blowing metrics that keep growing. The platform now boasts more than 51 million customers. It has signed up to 465,000 businesses, 600,000 agents and 42,000 developers across Kenya, Tanzania, Mozambique, the Democratic Republic of Congo, Lesotho, Ghana and Egypt. It processes more than 61 million transactions a day making it Africa’s largest fintech provider.

Safaricom’s chief executive officer, Peter Ndegwa says M-Pesa was launched to offer Safaricom customers affordable financial services.

“We launched M-Pesa back in 2007 in a bid to deepen financial inclusion for our customers by connecting them to useful and affordable financial services. Going into the future, we continue to build on our purpose to transform lives by providing our customers with a wide variety of digital solutions that empower them in an increasingly digital world, ” Mr Ndegwa said.

Indeed M-Pesa’s journey is a tale of financial inclusion and innovation.

Elizabeth Bosibori, 70, says that the invention came at the right time for her.

“Two of my grandchildren had flown to South Africa to work. It was late 2006. I didn’t have a bank account. Even now I don’t. So there is no way I could receive money from my children. But I remember them sending me money via M-Pesa from as far as South Africa. Since about 2008 to date, they have directly sent me money to my phone,” she says.

One of her grandchildren, she says, moved to Qatar in 2018, and she still sends money to her via M-Pesa, a thing she admits surprised her initially.

“You know, at first I thought that this miracle was for Kenyans alone. When I started getting money from South Africa, I thought it was just for Africa. I was shocked to see that it can work from even abroad in Qatar,” she observes, underscoring how M-Pesa took root in Kenya then rapidly spread its footprints across the globe. But it is from its epicenter in Kenya that the platform has immensely deepened financial inclusion.

Bosibori uses the money received from M-Pesa to pay the farmworkers in her home in the rural Nyamira and uses the rest for upkeep.

Elsewhere, in Kisii, Benson Ayienda, a journalist, says that Fuliza has been his biggest saviour when he runs into financial troubles.

“M-Pesa is good generally, but I think Fuliza is better if not the best. Fuliza has bailed me out on several occasions when I run out of money. Sometimes, when I don’t have cash with me, and not enough money in my M-Pesa account, I use Fuliza to pay some basic bills such as in restaurants, in transport or elsewhere,” he said.

Notwithstanding, the 30-year-old say she has tasted Fuliza’s down side.

“I think I was among the very first users of Fuliza after it was launched. Then, I didn’t know how it worked. I remember borrowing money using one of my dormant Safaricom lines. I borrowed Sh1,500. I stayed for a whole year without repaying and by the time I decided to repay the loan, it had accumulated interest. I paid back about Sh3500 in total,” he says.

Although Fuliza is godsent, Ayienda thinks that the interest rates are high.

Safaricom launched Fuliza, an overdraft facility for M-Pesa users, in 2019. It has since grown rapidly and as of September 2020, it had 1.7 million daily active users.

According to the financial report released by Safaricom in November last year, Kenyans borrow Sh1.3 billion daily from Fuliza.

Unlike Fuliza, M-shwari service allows M-Pesa users to save and borrow money. Launched in January 2013, it has also grown by leaps and bounds and by the end of 2014, it boasted 9.2 million sav­ings accounts and had disbursed Ksh 20.6 million in loans to 2.8 million borrowers.

However, unlike Fuliza again, M-shwari lists defaulters of its loans on the Credit Reference Bureau (CRB). Credit bureaus are managed by the Central Bank of Kenya (CBK). Those listed on CRB are red-flagged by the CBK, and can’t thus borrow money from any financial institution that’s regulated by the Central Bank until they clear their pending loans.

Stephanie, a hotel industry worker in the port city of Mombasa is a point in case.

“I borrowed Sh5,000 in 2014 when I was in college. I badly needed the money to pay for my exams, because the deadline was fast approaching and no money was forthcoming. Interestingly, until today I have not paid the loan,” she says.

Stephanie was listed on CRB long ago, but she is not perturbed by that.

“I still get my salary from the bank, even with the CRB listing. I will of course pay the money someday, but not soon. The good thing with M-Shwari is that that money has not accrued interest,” she offers.

Last June, Safaricom rolled out a business app with an offline mode. The Offline mode enables customers to use the M-Pesa app and complete transactions even without data bundles or when offline.

Mercy Chelang’at, a university student in Kisii says that the M-Pesa app has instilled financial discipline in her.

“I use the M-Pesa app, and I can therefore easily monitor my M transactions and money expenditure. Life in the university is tricky and one has to balance keenly. If you spend without care and tracking, you will wake up without a coin. The app has helped me a big deal,” she said.

However, Daniel Murerwa, a graduate of bachelor of science in information technology, says he is yet to embrace the app citing risks such as cyberattacks.

“One thing that most people don’t know about the growth of technology is that it comes with a corresponding growth in cyber attacks. I have heard of friends who have lost money so easily through banking apps such as the Mpesa app. Such apps are so susceptible to attacks aimed at swindling money in those accounts. For me, I use USSD to operate my mpesa account,” Daniel said.

When the Covid-19 pandemic hit Kenya in March 2020, the government encouraged Kenyans to transact businesses digitally and avoid cash to reduce the chances of getting the coronavirus. This accelerated uptake of Safaricom’s Lipa na M-Pesa. It was seen as a safe method of payment.

Erick Mosota, a shopkeeper in Kisii town, says it is during that time that he started using Lipa na M-Pesa service.

“Initially, I was telling buyers to send me money directly, but I later realised that some of them could later reverse the money sent. That’s when I subscribed to Lipa na M-Pesa. It is very safe and encourages a saving culture,” he tells Afcacia.

However, some business people still choose to receive payments in cash. Mary Odhiambo, who operates a cafe in Mombasa’s Tudor estate, only accepts payment in cash.

“I use this business to run my day-to-day operations money wise. So I need to get cash so that when I go home in the evening, I have my day’s portion. I also don’t want to incur the transaction costs when I go to withdraw money from M-Pesa Till account, so I avoid it altogether,” she says.

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