14 August 2010

Kenya: State Sim Card Listing Order Boosts M-Pesa

Nairobi — Safaricom's money transfer system, M-Pesa is now the engine behind the firm's success in the government's mandatory SIM card registration, statistics show.

This gives Kenya a competitive advantage in mobile money payments.

Last month alone, there were about 1.7 million new M-Pesa subscribers. This is almost equal to registered mobile phone subscribers of rivals Telkom Kenya and Essar Telecom.

Has become popular

Telkom has half a million subscribers on its Orange network while Essar has 1.5 million on Yu.

M-Pesa enables customers to transfer money by phone. It initially targeted the unbanked, but has become a popular and convenient way to transfer money due to its availability countrywide.

Safaricom says M-Pesa subscribers have grown by 61 per cent to 11.89 million by July 2010 from 7.38 million the same period last year.

It has transferred Sh525.84 billion since its inception in 2007 and the monthly average has increased by 30 per cent. Last month, Sh33 billion was transfered compared to Sh20 billion in July last year.

There were 19,500 agents by July. The money transfer system has become globally acclaimed with other countries adopting the model. South Africa's Vodacom, teaming up with local banking group Nedbank, is set to launch its service by August 31.

Vodacom hopes to replicate M-Pesa's success in Kenya, in Africa's richest country -- South Africa.

While in the country recently, US Under Secretary of State for public diplomacy and public affairs Judith McHale said the US will import innovations from Africa as part of the Obama Administration's bid to strengthen relations with the continent.

Citing the M-Pesa evolution, Ms McHale said her country's economy could benefit by importing the mobile money transfer system.

"We do not have such a system in America and we could make it part of our national payment system," said Ms McHale.

In return, America will support local universities and colleges through exchange programmes with those in America.

M-Kesho, a product launched by Safaricom in partnership with Equity Bank in May, has been able to grow its customer base to 455,000. The service is expected to deepen financial access in rural Kenya, especially areas with scarce banking infrastructure.

Bigger than cash

The potential of M-Kesho hook-up, once you become an M-Pesa customer is big; the brand promise of the service is now bigger than cash.

Besides the utility bill payments (water, electricity, cable TV etc), it now includes micro-insurance, micro-loans and most important of all, the ability to save.

Safaricom and Equity having revolutonalised their industries -- telecoms and banking respectively -- came together to set up the first mobile banking platform, where a customer is able to deposit and withdraw money, apply for a loan using mobile phone, while earning interest on money saved in mobile phone account.

Were jittery over system

Following the success of M-Pesa, traditional banks, which were initially jittery that the service was encroaching on their core business turf, have since partnered with Safaricom to offer mobile banking services to their customers.

Other mobile operators such as Zain Kenya and Essar Telecom have also followed suit to launch mobile money transfer service, Zap and Yu Cash respectively.

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