MMU releases infographic on Kenyan mobile money journey

Flag of Kenya

Flag of Kenya (Photo credit: Wikipedia)

As Nairobi jostles with the likes of Accra, Lagos and Johannesburg to become the continent’s technical innovation hub, mobile money continues to drive the Kenyan economy and is at the forefront of reaching the unbanked. Mobile money started as a simple money transfer system driven by a lack of entrenched financial systems and operates through a vast system of mobile money agents, enabling people to “cash in” and “cash out” using their mobile device. Safaricom’s hugely successful M-PESA is synonymous with the term mobile money, and has since launched in other countries in Africa as well as India, and now allows users to pay for goods and services using their mobile device.

The Mobile Money for the Unbanked (MMU) is a department within the GSMA and works with mobile operators and the financial industry to accelerate the access to financial services across the developing world. The following link is an infographic highlighting the Kenyan journey from 2006 to today, and outlines the exponential rise of mobile money.

http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2013/07/MMU-Infographic-The-Kenyan-journey-to-digital-financial-inclusion.pdf

Highlights of the report are are:

23m Mobile Money users in Kenya. 74% of the adult population

31% of Kenyan GDP transacted through mobile money services

96,319 mobile money agents in Kenya

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Google and Microsoft aim to use ‘white space’ in Africa to deliver Internet access

Image representing Microsoft as depicted in Cr...

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Microsoft will soon be piloting an Internet connectivity ‘white spaces’ project in rural South Africa, following on from similar projects in Kenya and Tanzania earlier this year. The trial will take place in Limpopo, and is similar to the pilot in Kenya as it targets very rural areas which may not even have access to the electricity grid. The Internet giant continues to eye its next generation of customers and aims to deliver broadband at reduced cost to the rural masses in Africa. ‘White spaces’ is a term for utilising unused frequencies for television broadcasters to deliver Internet services. Google also launched a project earlier this year attempting to bring fast speed Internet access to South Africa, using high altitude balloons or ‘blimps’ capable of transmitting signals across thousands of kilometres. The Google project is focusing on developing a wireless broadband network in Cape Town, using masts to transmit signals to local schools in Stellenbosch.

The Microsoft project will use the TV ‘white spaces’ and solar-based power stations to deliver low-cost broadband to 5 schools in South Africa’s Limpopo province. Microsoft isn’t simply providing Web access and says the schools will be kitted out with Windows-based tablets and projectors, while teachers will get laptops and training. Since access to power can be an issue in parts of South Africa, there will also be solar panels for charging devices where mains electricity is not available. So alongside the philanthropic leanings, Microsoft is clearly looking to engage the next wave of potential customers.

The Limpopo trial, which aims to connect local schools, is similar to Microsoft’s Kenyan pilot, in that it targets very rural areas that may not even be on the electricity grid (the Tanzanian pilot was more urban, dealing with high-density, low-income areas). The Limpopo pilot involves solar-powered base stations and – Microsoft being Microsoft – each school also gets a range of Windows tablets for pupils, laptops and training for teachers, projectors and teaching materials.

The ‘white spaces’ technology isn’t solely for emerging markets, and it could have potential right across the world. Google’s TV white space database was approved in the US just last month, while it was recently reported that both Microsoft and Google are considering launching the project in the UK in the future.

Large Internet players like Facebook, Microsoft and Google often talk about the next billion people to access the Internet, and how the majority of them will come from the developing world and will access it through mobile devices. Recent reports highlighted the fact that Facebook and Google are persuading wireless carriers to offer cheap or free internet access to customers for stripped-down access to the web giants’ sites. Considering that Facebook currently only has access to about 5% of the African continent’s population, there is a massive opportunity here for the social networking giant,

There is also likely to be an influx of cheap, sub-100 dollar smartphones into Africa over the coming years and Google wants to be at the forefront of this through the production of cheap Nexus phones and tablets. Google’s gives away its open-sourced software on Android for free so as to increase the reach of its information-gathering system, and Africa is seen as a massive opportunity. Google wishes to break into African and Asian markets by reducing the cost of smartphones and is doing this to exert is monopoly position in these, in Internet terms, virgin territories.

So, it is easy to understand why the likes of Google and Microsoft are looking into innovative ways of bring high speed broadband to the masses in Africa. The Internet giants’ continued growth depends on reaching new people in the developing world, who will be the next generation of its customers. Their intentions clearly aren’t completely philanthropic, but that doesn’t mean it isn’t enormously beneficial to developing economies whose people are accessing the Internet for the first time. In the end, for both Google and Microsoft this all comes down to wanting to spread connectivity, and therefore those companies’ addressable markets. This connectivity will also have major benefits for the economies of the countries concerned, so everyone should do well out of it.

How mobile technology is transforming Africa

English: Motorola V66 mobile phone

English: Motorola V66 mobile phone (Photo credit: Wikipedia)

Mobile phone numbers are likely to reach 1 billion in Africa by 2015. How is mobile technology transforming peoples’ lives?

Education

Despite Africa containing many of the world’s fastest growing economies and a burgeoning middle class, it still lacks behind in educational standards. As mobile uptake increases, and a flood of cheaper smartphones enter the continent offering Internet access, there is a tremendous opportunity to allow the mobile phone to facilitate educational training. In Nigeria, a country with well below average educational standards, UNESCO recently launched an SMS educational toll aimed at providing primary school teachers with regular updates on educational content. The scheme in Nigeria follows successful initiatives in other parts of the developing world that have opened up mobile learning to those in rural areas as well as women, who can be excluded from traditional forms of education.

Empowerment of women

It is potentially an unexpected benefit resulting from the exponential uptake of mobile devices in the developing world, but mobile phones have definitely helped the most marginalised in society which often include women. The move towards mobile money has opened up financial services to women, who can receive payments directly to their mobile phone, and has resulted in increased independence and a feeling of empowerment. From a healthare perspective, the mobile device can act as an excellent tool to disseminate information from malaria SMS warnings to maternal healthcare and advice. The mobile device is allowing women greater control over their lives.

Employment and payment

Mobile devices can act as tools of education and training for workers in hard to reach places without the costs of more traditional face-to-face training methods. There is no substitute for personal training but the mobile device is a step in the right direction.

Recent reports from the Democratic Republic of Congo also highlighted the fact that mobile banking has led to government workers getting paid on time as well as the amount owed to them. In a system where corruption is endemic, this is no mean feet. Workers get exactly what is owed to them, avoiding the traditional cash pay packet and superiors syphoning off ‘tips’

Transport

Mobility data is created when someone uses their phone for a call or a text. A user is then registered to the nearest cell tower and their movement is ascertained when they move form tower to tower. Use of this data is often known as crowd sourcing, and governments are now exploring the possibilities of using this data to update city’s transport systems. For example, the giant mobile operator, Orange, recently released tracking data on its phone users in Ivory Coast and researchers from IBM have started to use this data to update Ivory Coast’s transport system and cut travel times in the country’s largest city, Abidjan.

Personal finance

The African continent counts 15 of the top 20 countries in the world by mobile money usage. Mobile money is often associated with Safaricom’s hugely successful M-PESA service, which operates in several countries including Kenya, Tanzania and more recently, India. Access to a mobile phone is ubiquitous in many parts of Africa, and the mobile money service has empowered huge swathes of people by allowing them to pay bills, for goods and services, and transfer money from cities to rural areas at the touch of a mobile keypad button. In addition, the service has facilitated savings programmes protecting vulnerable families during times of hardship. Mobile money has helped governments and organisations reach the previously “unbanked”, who are often the most vulnerable in society but are able to access mobile phones.

A lack of entrenched banking services, minimal fees associated with the service, the huge geographical distances that separate city workers from rural families, and the fact that the vast majority of people own a mobile phone in Africa have all led to the huge uptake of mobile money services on the continent.

Google’s influence on Mobile Africa

Image representing Google as depicted in Crunc...

Image via CrunchBase

Google has for some time now espoused universal Web access and is currently employing various technologies and holding discussions with regulators from Kenya to South Africa to try and open up access to the mobile Web. Africa contains some of the fastest growing economies in the world and the exponential uptake in mobile devices across the continent and access to the Internet are seen as key in lifting economies up the value chain and helping to eradicate poverty through financial, social and political inclusion. Africa however has suffered from a lack of technological infrastructure and Google is now trying to change this.

The Internet giant is planning on building high speed wireless networks in sub-Saharan Africa using high-altitude balloons which are able to transmit signals across thousands of kilometres. One of its first projects on the continent is a wireless broadband network in Cape Town using several masts in Stellenbosch university to transmit signals to 10 local schools. Google is also currently in discussions with telecoms firms and looking at establishing partnerships to open up Internet access to people in rural areas. There is no clear solution however on a continent with a severe lack of infrastructure and nobody is certain as to how the future will look. What is certain however is that Google wants to be at the forefront of developments.

Large Internet players like Facebook, Microsoft and Google often talk about the next billion people to access the Internet, and how the majority of them will come from the developing world and will access it through mobile devices. There is also likely to be a flood of cheap smartphones in Africa over the coming years and Google wants to be at the forefront of this through the production of cheap Nexus phones and tablets. Google’s dominance of the smartphone market is not itself a moneymaker. It gives away its open-sourced software on Android for free so as to increase the reach of its information-gathering system. Making Android free to developers has never been simply about opening up the Mobile Web. It is a way of ensuring that Google’s apps and services are used on smartphones harnessing as much data, information and add revenue as possible. Google now wishes to break into the African and Asian markets by reducing the cost of smartphones. It is doing this to exert is monopoly position in these, in Internet terms, virgin territories.

So, it is easy to understand why Google is helping to bring mobile Internet access to parts of Africa. Google’s continued growth depends on reaching new people in the developing world, who will be the next generation of its customers. Its intentions clearly aren’t completely philanthropic, but that doesn’t mean it isn’t enormously beneficial to developing economies whose people are accessing the Internet for the first time.

Why does Africa lead the way in mobile money?

Satellite image of Africa, showing the ecologi...

Satellite image of Africa, showing the ecological break that defines the sub-Saharan area (Photo credit: Wikipedia)

Mobile payments,  mobile wallet and NFC are seen as the next big things in the UK mobile advertising landscape. The opportunity around the use of mobile data such as GPS and payment history to allow advertisers to target potential customers dependent on where they are and what they’ve bought is much hyped. It is seen as such an opportunity that former enemies Vodafone, EE and O2 have combined forces to form WEVE, a joint venture allowing advertisers to run targeted campaigns across the 3 giant UK telecoms operators networks. Mobile payment is seen as the future. However, while systems such as NFC limp along in the UK, Africa is at the forefront of mobile payments and it is the African continent that is most likely to teach the rest of the world valuable lessons.

It is important to separate mobile banking and mobile payments. In the UK, mobile banking often refers to an extension of the services of a traditional bank ‘s services and is widely used by consumers. In Africa, mobile money has been driven by the mobile operators and allows people to transfer money, pay bills, and purchase goods and services using a mobile device, all without accessing a traditional bank account. Mobile money, often associated with Kenya’s M-PESA, is aimed at serving the unbanked, the under-banked and the under-served. Mobile payment is an extension of mobile money and involves the use of the device itself to pay for goods, and Africa is likely to see a surge in this over the next few years.

Why is Africa so far ahead of the UK in terms of mobile money and payments?

A lack of entrenched payments systems in Africa

Africa is a continent that is rich in technological innovation and some of this can be attributed to an open-mindedness, a determination, and no fixed way of doing things. There are no preconceived ideas around debit cards and credit cards being used for payment. Mobile payments have therefore seen an early adoption on the continent. Whereas there are countless ways of paying for goods and services in many parts of the world, this hasn’t been the case in Africa, making mobile money a straightforward choice for many.

A tool of necessity for the unbanked

Many Africans fall into the unbanked category and don’t have access to traditional financial services that are taken for granted in the developed world. Mobile money is therefore a ‘must have’ service for many people. It is not a question of being ahead of the curve,  it is a necessity.

Minimal fees associated with mobile money

Fees charged by services such as Safaricom‘s M-PESA  are minimal compared to traditional banks so mobile money is tempting for many cash-strapped Africans. Despite an increase in the fees charged by mobile money agents in Kenya over the last few months, the total value of Kenya’s Mobile Money market hit $5bn dollars in the first quarter of this year.

Geographical distances and city workers

M-PESA was originally designed as a system to pay back microfinance-loans which reduced the transaction costs, allowing for lower interest rates. However, in a country like Kenya where lots of people work in cities like Nairobi and Mombasa and transfer money back to families in rural areas, the M-PESA service became increasingly used as a mobile transfer system. The distance that often separates the main bread earners and dependants in Africa is often vast. This has contributed to the exponential increase in mobile money usage in Kenya.

The integral role of mobile in Africa. Mobile money is simply an extension

Mobile is often an essential part of people’s lives, from agriculture, health care, to education, so it’s use for payments is a natural step for many people to take. If you’re an expectant mother receiving regular SMS updates that offer pregnancy and childbirth advice, why wouldn’t you use your mobile for payments?

Lack of regulation and restrictions

Safaricom’s M-PESA system was launched with very little resistance and it was allowed to flourish without the sort of restrictions we would see in the UK. It began in an experimental way with very little marketing around it and has benefited because of the lack of bureaucratic red tape as well as Safaricom’s dominance of the Kenyan market. This dominance has also meant a simple solution, whereas in other countries the launch of mobile money products has been ineffective due to too many players in the market.

Technology seen as critical in Africa, mobile much the same

The African continent is currently undergoing a technological boom, with mobile at the center, and this entrepreneurial spirit lends itself well to mobile money adoption.

We cannot mimic all of Africa’s success with mobile money, however many areas can be ‘copied’. Indeed, M-PESA is starting to do well in other countries, including Afghanistan, and it recently launched in India. In the future, mobile payments will extend to areas over and above the transfer of money, and devices will continually be used to pay for goods and services. This is happening now and will be even more prevalent  in Africa as sub $100 smartphones begin to flood the market. For this next stage to really take off, there needs to be a one system-fits-all approach across devices and network operators. There also needs to be a clear benefit for consumers to pay for goods using their mobile device such as loyalty schemes, offers and location based incentives. The future in mobile money and payment systems is likely to be driven by Africa.

Kenya’s Mobile Money Transfer hits $5billion in Q1. But doesn’t tell the whole story

English: Mombasa ferry, Kenya Русский: Паром в...

English: Mombasa ferry, Kenya Русский: Паром в Момбасе, Кения (Photo credit: Wikipedia)

A Central Bank of Kenya report has shown that mobile phone based transactions across all networks reached $5bn in the first 3 months of 2013. This was an increase of $0.76bn on the same period last year. The CBK said Kenyans made the most transactions in January, when transactions were worth $1.69 billion. In February, the value dropped marginally to $1.68 billion. This fell again at the end of the quarter to $1.6 billion in March. This month on month drop does not reflect what happened in the same period last year, when the value increased month on month significantly.

This drop in value is a slight concern and coincided with M-PESA‘s increase in charges because of the government’s introduction of a tax on mobile money transfer.

What is mobile banking?

Safaricom launched the mobile banking M-PESA service in 2007 and its simple premise is to allow people to transfer money and pay bills who don’t have access to traditional financial institutions. Its success and uptake has been revolutionary in Kenya and the M-PESA service has since launched in other parts of Africa and India. Many Kenyans live and work in big cities like Mombasa or Nairobi and send money home through their mobile devices to families living in rural areas. The system is quick and easy and, crucially, M-PESA has gained the trust of millions of Kenyans with an estimated 17 million Kenyans using mobile banking in what is currently the world’s hotbed for mobile money. As one of many unexpected consequences of the service, mobile money was also credited for easing tensions in Kenya after the post-election violence in 2008 by allowing people to receive money when trapped hiding out in slums.

With mobile banking there is no need for a smartphone or an updated handset which is essential on a continent where the basic feature phone is still very much the phone of choice. Customers hand cash over to a mobile money agent, their mobile account is then credited, and can then send mobile money to a recipient who then cashes it in at another agent through a secret code. Commission is then paid to the agent. However this fee compares favourably to bank fees. The reduced costs coupled with the exponential uptake of mobile devices in Africa and the ease with which you can begin begin mobile banking have been the major reasons for its success.

However does the increase in mobile banking in Kenya tell the whole story? What should we take from the fact that the overall value of transactions fell month on month in the first quarter? What else needs to be done to improve access for the unbanked?

According to a new report from the International Telecomms Union (ITU) the number of mobile phone subscriptions is expected to pass seven billion by early 2013, surpassing the world’s population of 7.1 billion soon after. In Africa, despite the exponential uptake of mobile phones over the last decade, the continent still lags behind in terms of number of subscriptions per head. The poor and those in rural areas are often the ones lacking mobile devices and subsequently excluded from the mobile banking system. Governments need to do more to encourage the uptake of mobile devices or subsidise contracts for the poor to ensure everyone benefits.

Questions around trust in using a mobile device for the transfer of money still remain. Just as in the UK there probably needs to be a UK-wide advertising campaign to persuade people of the security around mobile payments and NFC, so do African governments need to reassure the population around the security of mobile transfers.

People also need to be persuaded of the benefits of mobile banking. What can mobile banking bring to a market trader in rural Kenya who has been using cash all her life?

Despite the success of Kenya’s M-PESA, more needs to be done to ensure the poor are not left behind and the gap between rich and poor is not widened. The premise of mobile banking is to reach those who had previously been unreachable, particularly those in rural areas, and its uptake needs to be stimulated by governments, NGOs and mobile operators.

How mobile technology can empower women in the developing world

English: Mobile phone evolution Русский: Эволю...

English: Mobile phone evolution Русский: Эволюция мобильных телефонов (Photo credit: Wikipedia)

The proliferation of mobile phones in the developing world has been both rapid and remarkable and it opens up possibilities to engage with the most vulnerable and marginalised in societies, which in many cases are women and girls. The 2013 Women Deliver conference takes place at the end of May in Kuala Lumpur, Malaysia, and offers the opportunity to galvanise the global community to invest in mobile technology and highlight all the opportunities it brings, some of which I have outlined below.

So, how is mobile technology helping women and girls and what are the potential opportunities?

Mobile devices are improving access to financial services

The move towards mobile banking in developing countries opens up opportunities for women to have more control over their finances. This is particularly relevant in developing countries where the purse strings are traditionally held by men. Mobile payments from work can be made directly to a woman’s phone which offers an additional level of financial control and independence, as well as assurances that the full salary is paid.

Mobile banking systems, such as Kenya’s hugely successful M-PESA, open up financial access to millions of the ‘unbanked’, a large percentage of which will currently be women. The ease with which a mobile bank account can be opened up is vital in allowing women to gain financial control and independence, particularly in countries without access to traditional ‘bricks and mortar’ financial institutions.

Mobile technology, in particular SMS systems, are improving access to healthcare 

Mobile technology circumvents geographical obstacles . It sounds almost too obvious to say, but the mobile device of course removes the need to travel to receive information. In a huge continent such as Africa, which often lacks traditional transport infrastructure, the mobile device can act as an excellent tool to disseminate information from malaria SMS warnings to maternal healthcare and advice. Nothing can replace seeing a doctor, but regular communication via SMS is the next best thing in providing potentially life saving information.

South Africa uses text messaging to improve Maternal Health Access
The mobile phone evokes a feeling of connectivity and independence amongst women

People often refer to ‘the next billion’ when it comes to internet access, and how a large percentage of these users will be from the developing world and will use their smartphone to access the internet. For the moment the basic feature phone is ubiquitous, but the African continent is currently experiencing a boom in its consumer class who are demanding access to the same technology we have in the west. This demand combined with a potential flood of cheaper, Chinese produced smartphones will open up the internet to millions of people who traditional lacked access. For women, the mobile device will serve as a tool of empowerment and is likely to open up female-focused social networks and stimulate women’s rights groups, in areas such as employment. In a continent that is hugely diverse, the mobile tool and the access to the internet it offers will act as an essential portal to access information and act collectively on women’s rights.

More empowerment for women leads to more women in the workforce and greater economic prosperity for a country

It is a fairly broad statement, but the engrossing Hans Rosling puts it very eloquently in a TED talk. The birthrate of a country has nothing to do with religion, but is more closely linked to the number of women in the workforce. As mobile devices offer women access to financial services, educational tools, and health care advice, it will also act as a tool to boost the number of women in the workforce and allow them to contribute economically at a personal and societal level. The more women in the workforce, the more the childbirth rate of a country decreases, the less strain there is on a country’s resources.