Thoughts from M4Change Nairobi

In reflecting on M4Change Nairobi, it occurred to me that ideas largely cluster around other ideas. It was difficult to decide whether this is because ideas emerge as responses to felt needs or because a dominant idea creates a sort of tunnel of vision, sucking other ideas into itself. I would say it was a little bit of both.

Whatever the case, the dominant topic at M4Change in Nairobi convened by Strathmore University and, headlined by two talented and energetic young ladies, Jessica Colaco and Juliana Rotich and held at Strathmore University on 27th June, 2009 was that of Mobile money transmissions, with Safaricom’s MPesa clearly at the back of everyone’s mind.

That said, it was not surprising that the first session was on the topic of Mobile banking. It’s clear mobile money has significantly impacted society and commerce in Kenya. Landing into the country, you encounter its effect almost immediately. If you ask your Taxi driver, he’ll likely tell you he is willing to receive his payment via the dominant mobile money transfer system, MPesa. 

If you penetrate Kenyan society you will find other innovative, original uses.  There was a report of how investment clubs, known locally as Chamas, a very popular savings unit in the country, use MPesa to collate and save their funds. This is done either done on a dedicated phone or on the Treasurer’s phone. The officials spread risk and share joint responsibility for the funds thus collated by each keeping one digit of the account’s pin number so that they can only access the funds together.

Koome from Clean Air Action shared how the organisation has used MPesa as a cheap, convenient and timely way to disburse money to farmers in the Mt Kenya region to incentivise farmers to plant trees.

Other examples of use mobile payments abound including but not limited to paying bills, paying rent, paying casual workers and paying school fees. The critical question of the Mobile Banking session at M4Change Nairobi and indeed of the day therefore became, “where do we go from here? What’s the next thing for mobile money beyond facilitating remittances?

The techies and developers in the house expressed a strong interest in seeing the MPESA API (Application Programming Interface) ‘set free’ to enable them develop new and innovative uses for mobile money. Per one of the participants who also attended the Mobile Banking Conference held in Nairobi earlier, MPesa is owned by Vodafone so that is where the decision to release the API would be made. (Aside: In thinking about this I came to the conclusion that this is a plus rather than a minus. Especially if reports are true that international development funds were invested in MPesa’s for initial development, it should make the service more susceptible to lobbying to be more open and accessible.)

There were a couple of side discussions of note: should (independent) developers for the mobile platform develop services targeted at specific uses and users or develop services and give them to users who will find uses for them according to their needs? And, should companies be driven by a desire to deliver specific benefits to the end user or simply by a direct profit motive that then yields the benefit? The back and forth on this was not so much conclusive as thought-provoking.

The challenges that came to the fore included the lack of interoperability between Kenya’s existing mobile money services. On the surface this makes sense on account of the services having been initially designed not so much as profit centres but as a “retention factor”, to significantly increase switching costs for users. As long as they ably serve this purpose especially for the dominant market player, Safaricom, there is little impetus on the part of the mobile operator to allow transfer across networks. As I see it, this would typically be an area where relative newcomers into the fray (Zap versus Safaricom for example) would have an opportunity to lead in being reactionary and providing cross-network transfer capability. I imagine however that in this case, both technical and security considerations would necessitate proactive participation of both parties. (Is this a space that the CCK is justified in occupying as arbiter?)

The response of banks to MPesa was also a subject of interest. It took a while, methinks, to understand what impact the entry of mobile money solutions into the financial services space meant. When at last they did, they initially responded somewhat defensively, with calls to the Central Bank of Kenya to regulate (code for rein in) MPesa. Now however, they’ve made significant progress and are proactively involved in introducing their own mobile money remittance platforms such as Hello Money by Barclays, or working in tandem with MPesa such as Consolidated Bank which it was reported enables transfers between its accounts and MPesa.

Along a like theme, the highlight of the afternoon was a presentation about a mobile payment solution from Rwanda. The service, Smsmedia, enables Rwandese to purchase prepaid electricity via scratchcard and pay for its use via text message. What was particularly interesting to me about the Smsmedia presentation by Jeff Gasana who flew in from Kigali just to participate in M4Change Nairobi (Now that’s dedication!) was that when efforts to collaborate with the dominant local mobile operator to facilitate the payments they envisaged failed, they went ahead and created their own solution, a scratchcard system which cost a little more the customers but still delivered the value that they needed, both for the consumer and for the principal utility partner, the Electrogaz company. Now that they have the critical mass on their database, organisations that want to deliver messages to their network of customers are subsidising the cost of the service. Currently, they sell 40% of Electrogaz’s prepaid electricity. A simple, effective sustainable solution which has deservedly won numerous awards. The possibilities for scaling ‘across’ their experience with scratchcard payments seem endless. Smsmedia is definitely a company whose genesis it would be interesting to follow. Look it up at Kudos to Gasana and team.

On a slightly different but no less interesting note, the afternoon discussion ended with a lively discussion about good vs ‘bad’ uses of technology sparked by a presentation about Bluetooth stumbling, a viral way to bypass normal mobile phone transmission channels to transmit messages using a knock-on effect centred on a mobile phone’s unique IMEI number as identification.

Good things are happening in Nairobi, for certain, looking forward to more!

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Thoughts from M4Change Nairobi
was published on 06.07.2009 by Wambura Kimunyu. It files under east africa, sub saharan africa
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How to get the unbanked banked

We met Alex Comninos at the MobileActive08 conference in Johannesburg, where he told us about his research on mobile payment and mobile transfers. In the interview below he explains how mobile payment systems like M-Pesa may improve the banking situation in Africa. “We are looking at how we can deepen services like this to integrate people into the formal bank sector, give them access to credit,” Alex says. He further explains how having access to a transaction history would not only help people learning about budgeting, but also potentially make it easier for them to receive loans.

Alex works as researcher and network coordinator for Research ICT Africa, which is based in South Africa.

See also MobileActive’s notes from Alex’ talk at the conference.

This is the 13th interview from our MobileActive08 video podcast series, shot at the conference in Johannesburg (organized by MobileActive and sangonet).

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How to get the unbanked banked
was published on 16.02.2009 by Martin Tomitsch. It files under sub saharan africa
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M-banking and economic development

Once more I would like to introduce some papers that I found interesting and insightful during writing my thesis.

Mobile banking and economic development: Linking adoption, impact, and use – by Jonathan Donner, Microsoft Research India and Camilo Andres Tellez, London School of Economics and Political Science. It was published this December in the Asian Journal of Communication.

In the following a short summary of the paper:

The paper is about research of the usage of m-banking and m-payment systems which are used by people without access to traditional banks. Specifically, small enterprises in urban India are observed.

Across the developing world, there are probably more people with mobile phones than with bank accounts. In countries like The Phillipines or Kenya services which provide banking services via mobile phone are very popular.

In the developing world, m-banking/m-payment applications are appreciated by the customers as well as the companies. Customers are happy that they get an affordable possibility to transfer money without handling cash, mobile phone companies see it as an easy service to offer and strengthen the bond to the customer, banks have identified it as a convenient method of “branchless banking”.

Most systems offer three services:

  • Store value in an account via a handset
  • Convert cash in and out of the stored value account
  • Transfer value between accounts

To date there is only few research on adoption and usage of m-banking/m-payment systems, especially the contextual factors have not been studied so far.

Three examples for important contextual factors:

  • Conceptualizing Electronic Money:
    interface to handle account services has to be easy and understandable
    “invisible money” has to be represented in an appropriate way
  • Existing Payment Mechanisms
    existing mechanisms and their functioning have to be kept in mind
  • The Social Embeddedness of Economic Transactions
    differences to whom the money is given
    woman empowerment through greater indepence?

When m-banking/m-payment is studied, there are doubtlessly many parallels to other ICTs. Considering it generally as an ICT4D, there are three cross-cutting themes which characterize the social structures underlying the usage of technology:

  • Bi-directionality of influence between communication technologies and the social structures in which they exist
  • Amplification and altering of existing social structures
  • Introduction of trust in the technology, in people, in own skills, …
Picture taken by Turkairo and uploaded on FlickR

Picture taken by Turkairo and uploaded on FlickR

Own study in urban India:

Despite the IT boom in India, most enterprises are still traditional, small and informal – without bank accounts. This study explores, how m-banking/m-payment systems might be used there. Business owners from Bangalore were interviewed for that purpose.

Three types of approaches were identified:

  • Relational businesses:
    no need for complex ICTs
    desire for mobile phone, but problems with affodability
  • Locational businesses:
    special relations to people in their business network
  • Formal enterprises:
    bigger companies
    active users of ICTs

Usage of ICTs has different motivations:

  • Getting new customers
  • Keeping better in contact with present customers
    issues with trust and user capabilities
    19 of 20 enterprises will for now stick to the face to face model for credits
  • Cost-savings are an important reason for using ICTs nowadys

More research concerning the conventions of using ICTs would be useful

  • This could explain the current usage of some services
  • the impact of providing the “unbanked” with a bank account have to be studies more closely


  • The emergence of m-banking/m-payment has implications for the whole social and economic sphere
    the borders between domestic/productive and social/transactional spheres are blurred
    both, social and economic spheres should be considered in further research
  • “the true measure of that importance [of m-banking/m-payment] will require multiple studies using multiple methodologies and multiple theoretical perspectives before our questions about adoption and impact will be answered [from the article]”

For the whole article I may refer here.

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M-banking and economic development
was published on 21.12.2008 by Florian Sturm. It files under south asia
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