24 September 2011

Kenya: Could Someone Please Start M-Pesa in South Africa


If there are any Kenyans out there who feel slightly inferior or defensive when Kenya and South Africa are compared and measured against each other, I just want to tell you that you can stop. In the last few months I have been here in SA I have come to see there are certain areas in which Kenya is clearly ahead. For instance in both countries they have M-Pesa. However while in Kenya nearly everyone has access to it (or some version of it) in South Africa it seems to have failed to take off.

Recently in the pages of www.moneyweb.co.za I came across an analysis about why this M-Pesa works fabulously in Kenya and not as well here in SA. The writer of the piece suggested it was because when Kenya's M-Pesa was launched back in 2007 (was it really so recently?) it came into "a vacuum of clear guidelines and precedents" and that "thanks to a loophole in the banking regulations the service did not at the time require a banking licence to operate."

He reminded his readers that the established banks in Kenya did all they could to have the new mobile money system closed down but that "an audit vindicated the upstart service by certifying that M-Pesa offered "bank-grade security and controls to its customers". And as we all now know, "At the end of the process M-Pesa was given a clean bill of health and allowed to continue to operate."

The problem here in SA and even in places such as Nigeria is that the banks having seen how they were outmanoeuvred in Kenya have all managed to get in on the act. Another writer has observed "the involvement of banks (referring specifically to M-Pesa and Nedbank in SA), immediately increased the complexity and cost of the service".

The second thing we can be grateful for in Kenya that our South African brethren do not have, is a liberalised banking sector. In Kenya we have not had exchange controls since the 1990s. This means for instance you can send money out of the country if you have to without having the government breathing down your neck wanting to know why and what for.

Many were the times I sent cash via my bank in Nairobi to the UK and elsewhere without an eyebrow being raised. Here in SA every time I have wanted to send money back to Kenya it has been a drama. I can tell you for nothing that it makes things such as credit card and bank loan repayments a circus. You need to have all sorts of documents at hand including a proof of residence (often your lease) and even then you can't just send money but you must explain that it is a gift.

Then there is the (in Kenya at least) simple business of opening a bank account. Opening an account at any of Kenya's banks is pretty straightforward. All a foreigner or expatriate needs is to present themselves at the bank of their choice carrying original identification with them, such as a passport. They should also bring proof of residency, such as their working visa or housing lease. One passport photo should be given along with a proof of Kenyan address. This can be a utility bill or a similar statement that shows the expat's name and address and bingo! You can start banking.

In SA on the other hand it is a whole process and in November 2010 the rules were tightened even more as I learned when I recently tried to open an account here. South African banking is meant to be world class but they still have stringent exchange controls and even after you finally get to opening a bank account the paperwork and bureaucracy involved in transferring money out of the country is enough to discourage one from even considering it.

Basically it looks like it will take me the best part of six months (or more) before I get all my permits settled and can finally open a bank. Meanwhile I'm grateful for online banking account that I did not close my Kenyan account before I left. Now if only I could find someone in Johannesburg who sells Safaricom airtime and M-Pesa, it would make my life so much easier. Surely some enterprising Kenyan such as the curio sellers at the African Market in Rosebank Mall could add this to their repertoire of goods and services.

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