Michael Joseph looks back at M-Pesa growth seven years later
Mr Michael Joseph, former Safaricom CEO. Photo/FILE
What you need to know:
Michael Joseph made public his worries during the rollout for the first time and his surprise at the success of the mobile money solution, which marks its seventh birthday Thursday.
Mr Joseph is regarded as the father of mobile money — thanks to the success of M-Pesa — which has grown beyond the traditional money transfer market to include payment of utility bills, payment of bill at the shopping malls and receiving dividends.
Former Safaricom chief executive Michael Joseph had deep fears on how subscribers would receive Kenya’s pioneer mobile money transfer service M-Pesa when it was launched seven years ago.
Mr Joseph made public his worries during the rollout for the first time and his surprise at the success of the mobile money solution, which marks its seventh birthday Thursday.
“I worried about how we would persuade our customers to use the service but was determined to make a massive effort to get them to trust us and to use the service,” he said in an exclusive interview with the Business Daily.
“I knew that we were on the verge of launching a life-changing product,” said Mr Joseph, who is now the managing director in charge of mobile money at Vodafone.
Mr Joseph is regarded as the father of mobile money — thanks to the success of M-Pesa — which has grown beyond the traditional money transfer market to include payment of utility bills, payment of bill at the shopping malls and receiving dividends.
On the morning of March 6, 2007 Mr Joseph launched M-Pesa with an ambitious plan to sign up 350,000 subscribers within a year.
But by the end of April 2007, M-Pesa had recruited 52,453 users who accessed the service through 355 agents countrywide, mostly in major towns.
“Without too much thought, I insisted that my team go for one million customers within nine months and they, fortunately, accepted this challenge.”
What followed was total surprise. M-Pesa had signed up 1.3 million users in nine months, and marked its first birthday with 2.07 million customers – who had moved a total of Sh14.8 billion in person- to- person mobile transfers.
Transactions from the mobile money business earned Safaricom Sh370 million in revenue for the year ended March 2008.
“I was pleasantly surprised,” said Mr Joseph, adding that he had originally seen the targets he set as “impossible.”
M-Pesa had gained traction in the market, offering a fast, convenient and cheap means of sending cash compared to using buses and matatus which were prone to theft.
Mobile money became an instant hit in Kenya, especially among urban breadwinners wishing to send money back home to their folks.
To keep up with the fast growth and demand for M-Pesa, Safaricom invested in building a network of agents.
“The key was to sign up M-Pesa agents and customers at the same time.” Mr Joseph says he knew M-Pesa would attract and hook customers on to the service, perhaps a pointer to why mobile number portability didn’t pose any threat to Safaricom.
“I knew once they began to use the service they would continue to use it and in this way the service would expand and grow.”
Asked about his lowest point with M-Pesa, Mr Joseph says he had none, but quickly cites the 2008 storm when commercial banks waged war on M-Pesa saying it was operating illegally as a bank.
“The banking industry misunderstood M-Pesa and raised concerns about it. The Ministry of Finance and the Central Bank challenged me to find a way of persuading the government that the product was safe and secure.”
The former Safaricom CEO says he will forever remain grateful to the then Finance minister John Michuki who ordered an investigation into M-Pesa and upon establishing that the service was secure and convenient gave it the green light.
M-Pesa emerged from the storm stronger, and banks lined up to act as mobile money agents. Some banks went further and integrated M-Pesa with their customers’ bank accounts widening its presence in the banking market.
Mr Joseph was Safaricom’s chief executive for more than a decade having taken the leadership of the telecoms firm in June 2000 till 2011.
His tenure saw M-Pesa revenues triple to Sh11.78 billion in the year ended March 2011 from Sh370 million in 2008.
Mr Joseph also steered Safaricom to sign up 13.8 million M-Pesa subscribers by end of March 2011. Safaricom’s M-Pesa agent network expanded to a total of 26,948 outlets under his watch.
Mr Joseph, 68, holds a Bachelor of Science degree in electrical engineering from the University of Cape Town and his career in the telecommunications industry spans five decades.
“We were particularly fortunate to have a loyal customer base that trusted us, a banking regulator who believed in M-Pesa and worked with us to make it happen, and entrepreneurial Kenyans who wanted to be agents,” he says of the service that now moves more money than some commercial banks.
