How They Work: “Mobile Banking (Cont’d)”

Many technologists and entrepreneurs have argued that mobile phones can empower people in the developing world by providing civic and commercial resources where traditional infrastructure is lacking. But what actually happens when people start using such technologies? There are many Mobile Phone providers that have introduced one package or the other, in their bid to expand their services from the normal voice and data services. As of now, the Mobile phones have evolved into a sort of “Bank”. In Kenya, the East African pioneers in mobile-money system, started what they called M-PESA, this has really changed the way Kenyans manage their money, by letting them borrow, save and pay for services more easily. The likes of Zain’s (AIRTEL) ZAP and MTN Money are just some of the brands that hit the market as soon as the potential was unleashed! In contrast, since its introduction in 2007, the researchers found, 38 percent of Kenyan households have at least one M-PESA user in them; by contrast, only 22 percent of adults have bank accounts. “In these sorts of economies, there’s not much of a bank presence, but money transfers are still important,” I suppose that is because of the prevalence of the mobile phones vis avis the availability of Banks. The population ratio of Mobile phones per household as compared to that of Bank cannot be compared at all. Banks are regarded as a preserve of the rich urban elites whereas the mobile phones are for all. It is easier to make a payment over the Mobile phone as compared to the Banks that require a lot of paper work as well as the bureaucracy notwithstanding! According to research, the M-PESA system, introduced by SAFARICOM, lets users deposit, transfer and withdraw funds via text message. The M-PESA function is not a bank, it does not pay any interest on savings or deposits; by the way, It does, charge fees for withdrawals and transfers instead. In spite of the above, a 2008 survey of about 3,000 households, representing 92 percent of Kenya’s population, found that despite M-PESA’s fees, large numbers of Kenyans were using it for basic banking functions. About 38 percent of money transfers originated in rural areas. According to the researchers, farmers were one group that employed the technology to lend each other money. The picture is no different when we look at Tanzania, Uganda and Rwanda. In Uganda, the major utility companies like water, Pay TV and electricity have embraced the system. One no longer has to walk long distances or stand in long queues to pay bills, all you have to do is simply compose an sms or go to your phone menu and have the payments made in a twinkle of an eye. As for me, I have got a SAFARICOM SIM card, I keep adequate money in case I need to buy some airtime or ask a friend to buy for me this or that from Nairobi. I do the same with MTN Uganda as well as MTN Rwanda. This way, I can easily and seamlessly discharge my bills without any ado. In fact, I have some people who send money to my Mobile phone as payment for this or that! MTN Uganda announced that it is approaching the one millionth mobile money services user. So far they managed to register 890,000 users to the Mobile-Money service, which is 16% of MTN’s subscriber base. Their goal is to reach 2 million users by the end of this year, and 3.5 million by 2012. To celebrate the success of the service, MTN Uganda shared some interesting numbers; $195 million was moved through the platform since launch in March 2009, 11.8 million transactions since launch in March 2009, $21 USD average transaction, 1005 active agents and more than 2,500 direct sales representatives, More than 1,600 MTN Mobile-Money service outlets. Approximately 60% of transfers are to recipients in rural areas – serving the unbanked. As for Rwanda, nearly six months after MTN Rwanda introduced Mobile Money transfer service, the response was positive. The service has been quite successful in its uptake, says the sources from MTN’s Mobile Money, close to six months after its launch, the service had registered close 72,000 users transacting more than US$ 1M. MTN targets 120,000 users by the end of the year and it had met 60% of the target. However, this was still a small percentage of the company’s 2 million plus mobile subscriptions. eddie@afrowebs.com