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

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.

Lagos vies with Nairobi to become region’s tech hub

Lagos Island and part of Lagos Harbour, taken ...

Lagos Island and part of Lagos Harbour, taken from close to Victoria Island, looking north-west (NB this is not Ikoyi Bay as wrongly labelled elsewhere) (Photo credit: Wikipedia)

The bustling, metropolitan city of Lagos in Nigeria has an ever growing population of some 8m people and is the country’s economic powerhouse making a significant contribution to its overall GDP. The port city is a city of islands connected by ferries and highways and is the capital of Lagos State. The standard of living is relatively high compared to many cities in Africa and, despite problems such as pollution and gridlocked city traffic, people flock to Lagos from far and wide in Africa with an estimated 30,000 people arriving everyday.

Lagos aspires to be, alongside Accra, Cape Town and Nairobi one of the continent’s tech powerhouses. Indeed, May’s three day Mobile Web West Africa event sold out its Lagos conference, bringing together companies, startups, inspiring investors and developers. The three-day event was the background to the emerging economic and inspired power of the region, and is a statement of intent to be at the centre of mobile innovation.

There are countless examples of centres of innovation cropping up in Lagos. Co Creation Hub is a collaborative work space for young entrepreneurs and is dedicated to accelerating the application of technology for economic prosperity. Individuals converge in one space to share ideas. They even have the chance to meet VCs and angels looking for promising investments. However, such meetup hubs compete with others around the continent. Nairobi has the iHub, a similar space, supported by companies like Google, Intel and Samsung. Nairobi has also recently begun construction of the much discussed Konza City, or ‘Silicon Savannah’ as it is often called. This is a project to build Africa’s most modern city with technology and innovation at the centre and will potentially be a blueprint for further African cities.

In Nigeria, mobile is also being used to reach the poorest and help economic and social prosperity. A mobile SMS educational tool has recently launched aimed at providing primary school teachers with regular updates on educational content to assist with classroom teaching. Launched by UNESCO, the technology will be available to anyone in Nigeria and will send teachers messages with educational information and advice once a day. The project should reach thousands of teachers across the country, who were previously out of reach and simply lacked the resources to teach effectively. Mobile SMS is a step in the right direction.

In Nigeria, and many of the major cities in Africa, there is a sense that anything is possible and the continent is ripe for investment and full of opportunity. A lack of traditional infrastructure is helping drive entrepreneurship, in mobile especially, and suggest that Africa will be the continent of the 21st century.

Nairobi continues its charge to become Africa’s technology innovation hub

English: Beautiful City of Nairobi

English: Beautiful City of Nairobi (Photo credit: Wikipedia)

The future of computing and internet access is widely believed to be mobile. At the recent Mobile Engage in the UK, Facebook discussed ‘the next billion people’, citing the fact that 4.5 billion have yet to access the internet, and the majority of new internet users are likely to do so through a mobile device. Africa, experiencing explosive population growth, a burgeoning consumer class, and the exponential uptake of mobile devices, is likely to be where much of new mobile internet users come from. Indeed, the GSMA believe that mobile connections in sub- Saharan Africa, home to some 900m people, will hit half a billion this year.

Kenya is a relatively stable democracy, has a long history of technological investment, and is likely to be at the forefront of mobile innovation. There are countless examples of why Kenya, and in particular Nairobi, is leading the charge to become the region’s technological innovation centre.

Firstly, and potentially the project with the greatest regional impact, Kenya has recently begun building the much hyped ‘Silicon Savannah’ development in Konza, about 60km south of Nairobi. The project aims to turn Konza into the most modern city in Africa and is widely expected to be a game-changer for Kenya’s $36bn economy.. The initial phase will be completed in 2017, and when finally completed in 2030, Konza City is expected to create some 200,000 jobs as well as countless schools and universities. Konza – economically and politically a “new city” in Africa – may well act as a blueprint for further developments on the continent.

Kenya was the birthplace of M-PESA, the hugely successful mobile banking service, which has opened up financial services to millions of ‘unbanked’ people in Africa. Africa is now a hotbed of mobile money activity, and the continent counts 15 of the top 20 countries by mobile money usage.

This month, Nairobi became the third African city, after Johannesburg and Casablanca, to become home to an IBM innovation centre. The GSMA, the governing body and set of standards for the mobile operators, also recently choose Nairobi for its first African office.

A recent Microsoft initiative, Microsoft 4Afrika, is investing in a strategic cooperation with business incubator iHub and m:lab in East Africa to help start-ups build and grow their businesses using Microsoft technologies. The cooperation aims to increase access to software and improve technological innovation in Kenya and the surrounding area. Indeed, both Google and IBM have regional offices there.

There are huge numbers of benefits for companies operating in technology and mobile to set up operations in Africa. Firstly, there is a real lack of red tape preventing innovation, which can often be found in Europe and the US. This means that innovations such as M-PESA can get off the ground quickly and spread to Tanzania and India as it has done. In addition, international companies can learn from efforts in Africa and transfer projects to the West. How much can we learn from the M-PESA mobile banking system to encourage uptake in the west. Indeed, in areas such as NFC and mobile payments, Africa is way ahead of the UK which will need to do a huge amount to gain the trust of the consumer around areas such as data use and security. What can we learn from the recent project in Ivory Coast which saw Orange open up its mobility data to help redraw Abidjan’s bus routes? Although projects using mobile technology are likely to be vastly different across continents, surely there are lessons to be learnt.

So Nairobi may be a leader in Africa, but as the poor outnumber the rich online, particularly through mobile connections, it may become a global leader in mobile technology. Watch this space.

Kenya pushes forward with “Silicon Savannah”

English: I&M Bank Tower in Nairobi, Kenya

English: I&M Bank Tower in Nairobi, Kenya (Photo credit: Wikipedia)

Kenya has begun building the recently dubbed ‘Silicon Savannah’ development in Konza, about 60km south of Nairobi and the project is widely expected to be a game-changer for Kenya’s $36bn economy. The country that has focused on technology as a means of economic progress, and brought the continent breakthroughs such as M-PESA and Ushahidi, has now turned it’s attention to ensuring that it is one of the main centres of Africa’s technology sector. M-PESA is the country’s mobile phone banking system which empowers people by allowing the simple transfer of money through a mobile device and has helped the previously “unbanked”. Indeed, it estimated that the service transfers the equivalent of 27% of the country’s GDP. M-PESA has seen a massive uptake in Kenya and Tanzania and has recently launched in India targeting 220m people in Eastern parts of the country. Ushahidi is an open source, not for profit project that allows users to crowdsource information via multiple channels including mobile, the web, and twitter.

Construction on the 5,000 acre piece of land in Konza, has begun in an effort to turn Konza into the most modern city in Africa. The project has been split into 4 phases, with the initial phase planned for completion in 2017. Encouragingly, it has been reported that the development is not just about attracting technology firms to the site, but is also a way of circumventing the country’s corruption, which has been deeply embedded for decades. The site is also projected to create 200,000 jobs when completed in 2030, as well as schools and universities. Konza – economically and politically a “new city” in Africa – may well act as a blueprint for further developments on the continent.

The project is a natural progression for Kenya’s aspirations to be the technology hub in Africa, and organisations such as IBM, Google, Microsoft and Intel have their regional headquarters there. Concerns however have been raised about the fact that most of the companies being formed in Kenya are based on a single app or software programme, making them economically vulnerable. In addition, despite clear progress in the technology sector, the Kenyan government still has a long way to go in addressing the country’s 40% unemployment rate.

Is Kenya Africa’s tech headquarters?

English: A lone giraffe in Nairobi National Park.

English: A lone giraffe in Nairobi National Park. (Photo credit: Wikipedia)

Africa is a continent that is young, vibrant and full of investment opportunities. Despite recent events in Central Africa, projects like iHub in Kenya offer an alternative picture of a bright future with a focus on technological innovation. Without the red tape and embedded infrastructure that can hamper European and US growth, Africa has been quick to develop solutions such as mobile banking. Africa may also be first in line to take advantage of NFC payments, which seem some way off elsewhere.

The iHub centre in Nairobi is an example of this ambition and is a tech community space providing opportunity for entrepreneurs to receive mentorship and potential VC funding. In addition, January this year saw the launch of the US funded Konza Technology City just outside Nairobi.

As other African cities such as Lagos, Accra and Cape Town jostle for position as Africa’s principal technology hub, it may well be Kenya that leads the way.