A Safaricom agent transacts on the M-Pesa money transfer service which
has become lucrative for agents and moves billions of shillings every
day. FILE PHOTO | NMG
The world is borrowing a leaf from Kenya’s M-Pesa innovation,
with mobile money moving an equivalent of Sh100 billion ($1 billion)
globally every day.
This is indicating that the mobile
money sector is having a demonstrable impact on the effort to extend
access to financial services and to provide a gateway to the digital
economy.
Research findings by two independent
think-tanks GSMA Association and McKinsey & Company, shows that
Safaricom’s M-Pesa exemplified the innovative approach that mobile money
providers are taking to developing payment platforms.
“While
mobile money providers may not currently have all of the in-house
assets or enabling regulation required to provide customers with use
cases beyond transactions, they can create a platform to facilitate
this,” said GSMA in its report.
Recently, Google integrated M-Pesa as a form of payment into its App Store making it easier for Kenyans to make purchases.
This has made Google Play as one of the first among global e-commerce sites to adapt to mobile money.
Before, customers could only pay using credit cards, which are inaccessible to most Kenyans.
Half
of mobile money users in the world are found in sub-Saharan Africa with
Kenya taking the lion’s share, while Asia recorded the fastest
year-on-year growth to grow to 34 per cent of all mobile money users in
the world.
The report said that mobile money also makes
good business sense, noting that shifting to digital salary payments
saves time and costs for both employers and employees.
Governments are also reducing budget costs by switching from cash to digital.
“In
Kenya, more than 250 government services are now available digitally
through the country’s e-government platform, e-Citizen. Over 90 per cent
of all digital payments on e-Citizen are made through mobile money.
This has significantly streamlined the collection process: it now takes
just one financial day to complete collections, settlement and
reporting, down from six months before 2014,” the think tank stated.
GSMA
director general Mats Granryd said mobile technology is also proving to
be an essential tool for delivering on the highly ambitious Sustainable
Development Goals (SDGs) now in their third year.
He
said better connectivity and new services are enabling healthier, more
inclusive communities, and mobile money remains a central part of this
story.
“It is contributing to 13 of the 17 SDGs, from
enabling access to essential services like health and education, to
empowering women with employment opportunities, to reducing poverty by
offering life-enhancing financial services, often for the first time,”
said Mr Granryd.
The
McKinsey and Company report acknowledges that regulation can accelerate
or hinder a mobile operator’s ability to grow – or make scale a prize
not worth attaining.
“Regulations can influence a
mobile money provider’s ability to grow and maintain a customer base
build and sustain an agent network, develop critical capabilities and
infrastructure, and offer products beyond basic payments,” stated the
McKinsey report.
The report indicated that for
providers of digital financial services, mobile money can be a gateway
into huge and largely untouched markets.
“Digital
finance has the potential to reach over 1.6 billion new retail customers
in emerging economies and to increase the volume of loans extended to
individuals and businesses by $2.1 trillion,” the report said.
It
goes further to state that the providers of these products stand to
gain by access to potential new revenue streams and to increase their
balance sheets by as much $4.2 trillion, in aggregate.
In
2016, Massachusetts Institute of Technology economics Professor Tavneet
Suri released the results of a study on the financial and social impact
of Kenyan mobile services since 2008, showing that it had lifted two
per cent of the population from poverty.
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