kenya’s Mobile Money Innovation Draws World Attention

The Brookings Institution in Washington has been playing host to a top-level conference effectively celebrating Kenya.

Governors of central banks, top executives from The World Bank, State Department, US Treasury, White House, Bill and Melinda Gates Foundation, and leading universities assembled to examine how to expand financial inclusion using new technologies.

Yet, at the very core of it, this parley was about Kenya.
How, as a presenter posed, a poor country on the right hand side of the map of Africa has revolutionised the use of mobile phones as a store of value and most importantly as a vehicle to bring virtually all the unbanked population into a sophisticated payment system.

How can this be copied? The eloquent presentations by The Governor of Kenya’s Central Bank, The Head of CCK and Michael Joseph (in his new capacity as Fellow of The World Bank) understandably got rapt attention.

To benchmark our achievement, we must do the unusual and acknowledge heroes who are not waheshimiwa. The M-Pesa revolution marked the meeting of three bold movers who were ready to take very major risks on innovation.
The unsung hero of this innovation was Dr Bitange Ndemo, the PS at Communications ministry, who in a letter late in 2006, urged his colleague at the Treasury to host a meeting of his team, Treasury and Central Bank to explore something he already saw as a challenge and opportunity bigger than any one agency of government could handle on its own.

Without a successful precedent to emulate, Safaricom’s Michael Joseph took the gamble to invest US$30 million in using a phone to send and receive money; something only Philippines had attempted half heartedly and an investment they assumed would take many years to recoup.

At the Central Bank, Prof Ndung’u had the audacity not only to ignore the deafening scare mongering of the big banks, and scepticism among high government people, but to stake out that facilitative regulation sometimes entails allowing innovations to go ahead even when the law for regulating it is not yet in place.
In the mix of this come the Kenyan people. Long used to costly and risky forms of moving money and untapped by the banks, they embraced mobile money much more than even the initiators could have dreamt.

A billion shillings

Today 18 million Kenyans move a billion shillings every day through their mobile phones. And the numbers are increasing daily. Apart from turning a phone into a virtual ATM card, a basket of products is in the offing; with banks scrambling to ascend this very platform they so feared when it first came.

Still the rare good news coming out of Kenya should not yield complacency. The confluence of scholarship and innovation can keep us in the lead team on this frontier.
Let our universities build on and own the good news. The political class must see that frontiers other than the traditional ones will determine winners and losers of this era.

Although the academic and entrepreneurial elite are listening and paying pilgrimage to Kenya, in short thrift, the dominant voices and publications on mobile money, electronic wallets, and related innovations will shift to the developed world.

Our story will be re-written and told to us by “experts”. Already Brazil and China are coming on strongly. Last year they both experienced more than 200 per cent growth in users of mobile money.

Sitting through the discussions in Washington, I could not help but reflect on Kenyan champions and leadership. Our triumph in mobile money joins a list of areas, which stand us proud in the community of nations.

We have produced champions on the track, in horticulture and in the immensely successful cadre of educated Kenyans occupying high positions in the corporate world.

Yet listening to the drone of Kenyan politics one is amazed at how such a materially progressive country can be so stuck in the past politically.

How can the same education system give us the Ndemos of this world and those waheshimiwas asking Kamukunji voters to vote for a Somali candidate because “these people” will then support “us” next year.

Where shall we engineer the confluence of innovators to re-align Kenyan politics to the entrepreneurial leadership it is so clearly carving out for itself?

Dr Kituyi is the director of The Kenya Institute of Governance and currently a visiting fellow of The Brookings Institution in Washington DC