Mobile money is transforming social relations in this East African country and giving control to the overlooked and underprivileged.  

Kenya’s landscape is covered by a dense network of small shops that offer citizens the possibility to use this service that comes from the leader of telecommunications and the most profitable company in the country: Safaricom.

In these stores you can deposit money that gets stored in your mobile phone, withdraw money that someone has sent you from a faraway province or top-up the pre-pay for phone calls. On top of that, each shop has its own TILL, an M-Pesa number for the business that allows users to pay for goods and services they have bought. The owner of the shop pays the rent himself, whilst at the same time losing a small commission on the payments of each purchase.

What is M-Pesa?

You could say that it is a phenomenon and a case study for the international community, and one of the principal sources of pride for Kenyans. In 2016 Mark Zuckerburg, founder of Facebook, came to Nairobi, attracted by the exclusive and extensive model put in place in this African nation. And, in fact, at this moment the majority of money transfers and movements in the country comes from money stored in mobile phones (Mobile Pesa, pesa meaning money in Swahili).

Despite being a developing country, with 70 percent of the population in poverty, almost all adults in the country have a mobile phone. In most cases these are not smartphones, but old generation phones, but more than sufficient to use the default application included in the SIM provided by Safaricom. 

Individuals can send money to other people using their mobile phone.  This is especially important in rural areas, where banks are often dozens of kilometres from home and people do not have access to a car.  A man working in the city can send part of his salary to his wife or mother without having to make complicated wire transfers.

M-Pesa is also safer since people do not have to carry cash particular in some dangerous neighbourhoods. “I carry my money in my phone, so I can´t lose it and nobody can rob me”, said one mother of a family in Kibera, the gigantic slum on the outskirts of Nairobi.

Mobile money helps families spend only on what is necessary.  In some cases where the head of the household may be wasteful, have a drinking problem or is not too responsible, the couple can agree to have his wage paid directly through M-Pesa to the mother, who in this case would be the household manager.  And so the money needed by the family is not wasted on alcohol.

The system seems robust enough to detect and reverse payment errors.  When money is transferred there is a record of the two cell phone numbers involved in the transaction.  As testified by one user:  “I, myself, in one purchase added an extra 0 and the owner of the store sent me back the large difference without myself having to return to his shop (I paid 150 instead of 15, and he sent me back 135)”.

This feature has also come in handy in detecting corruption especially among public officials.  In 2016 many police officers were put on trial when M-Pesa revealed payment trails left sending payments made from subordinates to bosses. “If someone earns 300, how is it possible that they send 1.200 per month to their commander?” M-Pesa provided the vital clue.

A costly service

One downside is that M-Pesa is an expensive system, at least to the consumer (even though they may not be aware).  With small transactions (that start from the equivalent of 1 euro) you get charged a few cents. If you send 2.000 Kenyan shillings (20 euros), M-Pesa charges you around 40. If you multiply this by the millions of daily transfers that Kenyans do, it is easy to see why Safaricom is the most profitable company in the country, and why the company´s chief executives have salaries worth millions of dollars.  Other mobile operators in the region such as Airtel have tried to introduce their own mobile money, but without the success of M-Pesa, because the mobile money business is for now highly dominated by Safaricom.