In 2013, the people of Kenya sent each other US$19.6 billion in payments and money transfers. According to Herbert Wattanga, author of Nairobi County’s Smart21 nomination, the total of their transactions exceeded Kenya’s national budget by more than $1 billion. And guess what? Not one of those transactions went through a bank. Instead, all of them went through mobile phones.
At ICF, we write a lot about the impact of the broadband revolution on every aspect of our lives, and about the urgent need it creates for cities and regions to adapt to its demands. You would be hard-pressed to find a better example than mobile banking in Kenya – even though it uses a technology many years older than smartphones.
In 2007, a mobile carrier called Safaricom introduced a new money transfer service called M-Pesa. Up to that point, banking in Kenya was largely controlled by foreign banks, which tended to serve only the most affluent Kenyans. Then the central bank rewrote its regulations in an attempt to expand access to financial services. One new regulation allowed mobile operators like Safaricom to provide mobile payments.
Safaricom’s move was meant to be business-as-usual: a new service that would help reduce customer churn. It allowed users to load money onto their phones through the same process they used to prepay for airtime. Money was moved with a simple text message, with each transfer incurring a fee of between $0.25 and $0.70. The money deposited was held, not by banks, but in an independent trust that Safaricom does not control.
So if you ever wonder what all the fuss about broadband is really about, M-Pesa offers a clue. Sure, it’s not broadband – but it is a revolution in online applications. It makes clear that the same technology bringing you you cute cat videos and spam in your inbox can profoundly change lives – but only in places that are prepared to seize the benefits technology offers.