How many smartphones are there in Kenya?

Bye-bye, cash? Kenya - mobile payment pioneer

In our series, we shed light on cashless payments around the world. There are changes everywhere, even churches and the homeless are now collecting their collections or donations digitally. After the first two parts have taken us to Scandinavia and Asia, we are now off to the African continent - to the pioneers of payment by mobile phone.

While mobile payments are only slowly establishing themselves in large parts of the world, this model celebrated its tenth birthday in Africa last year. Because paying by mobile phone does not require an ultra-modern smartphone. Even old devices without internet access are sufficient - they just need to be able to send and receive SMS.

It all started in Kenya with "M-Pesa". The "M" stands for mobile, "Pesa" means money in Swahili. With this service from Safaricom and the mobile phone provider Vodafone, it was initially possible to issue microcredits via mobile phone, i.e. small loans of usually only a few euros. The service was expanded in 2007 to include a payment function. Since then, you can send money from cell phone to cell phone, make transfers and even set up a kind of savings account on your mobile device. The service is now also available in Tanzania, South Africa, the Democratic Republic of the Congo, Mozambique, Egypt and Lesotho, among others. Around 30 million people use “M-Pesa” today; in Kenya, a quarter of the gross domestic product is processed through the service.

Mobile systems help against poverty

Access is simple: in order to be able to use “M-Pesa”, you have to apply for (free) access to a so-called “agent”. All you need is a registered SIM card and a mobile phone. Within a few minutes you can access the account on your mobile device; henceforth you can top up and withdraw money or make transfers in seconds. The fees for these services are typically around two percent of the amount.

In Kenya alone there are now more than 40,000 of these agents and thus largely nationwide coverage. A huge step forward, because, according to a study by the World Bank, three quarters of Africans do not have their own bank account. Thanks to the mobile payment system, they can still receive money from relatives who live and work far away from their families. The Massachusetts Institute of Technology (MIT) even attributes this innovation to Kenya's falling poverty rate.

First offshoots in Europe too

No wonder that such a successful model is also finding support outside of Africa. There are now offshoots of "M-Pesa" in India and Afghanistan, but also in the south-east European countries of Albania and Romania. However, it is unlikely that the system will gain a foothold in Germany. Unlike in African countries, (almost) all people in Germany and most parts of Europe have access to ordinary bank accounts. Online banking as well as always available cash, giro and credit cards make a system like "M-Pesa" almost superfluous. There are also modern mobile systems based on apps, such as Swish or MobilePay in Scandinavia. Nevertheless, Kenya remains the country that was the first to show the world that a cell phone-based payment system can work.

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