M-Pesa drives innovation five years after launch

Safaricom’s general manager of financial services Betty Mwangi
Safaricom’s general manager of financial services Betty Mwangi 

Five years ago, Safaricom pioneered the transfer of money with the launch of M-Pesa – a person-to-person cash transfer service that runs on the mobile phone.

At the time of M-Pesa’s launch in March 2007, the number of Kenyans with access to financial services stood at 58.7 per cent, according to a survey by Financial Sector Deepening.

That means more than 30 per cent of the adult population were out of the financial system and hence out of touch with the formal economy.

But another survey done in 2009 — two years after M-Pesa was launched — showed that access to financial services had risen to 67.3 per cent, cutting the size of exclusion to slightly more than a third – a development that has been partly attributed to the growth of the mobile money transfer service.

Mobile money transfers crossed the Sh1 trillion mark in 2011 with the M-Pesa platform accounting for the bulk of the transactions, according to the Central Bank of Kenya (CBK).


As the mobile money platform turned five, the Business Daily interviewed Safaricom’s general manager of financial services Betty Mwangi on M-Pesa’s growth and future prospects.

How has the journey for M-Pesa been over the past five years?

It has been fantastic and it is not the end. We have over 15 million subscribers whose key use is obviously money transfer. Five years ago, people sent money to their business partners, friends and relatives through formal channels such as banks and postal money orders but then there were these 80 per cent of Kenyans who had mobile phones but were confined to sending money by risky means such as matatu.

Kenya’s economy is structured in a way that there is a huge rural community that is supported by the urbanites and needed a fast, safe, affordable instant money transfer service.

What has been the impact of the money transfer service?

In the five years we have moved Sh1.46 trillion shillings through this service. Our monthly movement stands at an average of Sh56 billion.

Clearly there was a lot of money that was not moving through the formal channels such as banks and Western Union. M-Pesa has provided a platform to transfer this money safely and with speed besides making it visible.

In the first year of our launch only about 15 per cent of the users were women. That has risen to about 56 per cent so we can confidently talk about empowering women financially.

When would you say that the use of M-Pesa picked up?

It has been a steady growth. When we launched in March 2007 we expected to have about 300,000 subscribers by the end of the first year, March 2008 but by December we had one million customers. It has been phenomenal from zero to over 15 million now.

What is your view on competitors that have come into the money transfer arena?

Customers need a variety of service providers to choose from and for this reason we welcome healthy competition. There is room for competition and it gives the whole industry credence.

Which areas of the money transfer service have been growing?

Initially this was a person-to-person money transfer service. But it has evolved over time to become a payment platform and we call that customer to business.

Then we have the other direction that is business-to-customer so businesses are able to for example disburse salaries to their employees or companies paying dividends to shareholders.

What would be your reaction to comments that M-Pesa is linked to inflation?

That is statistically not true. We facilitate the transfer of money and do not influence the amount of money in the system or the lack of it. Velocity of money and inflation are two very different things.

To what other factors can you attribute the success of the money transfer service?

When we launched in 2007, management put in a lot of resources to some of the more expensive aspects including rolling out an agent network.

We now have over 37,000 agents and the whole idea is to have as many points of presence as possible for the convenience of our customers.

One of the challenges for the banking industry has been the rolling out of brick and mortar to get as close as possible to the end-user or the potential customer. We have gone through this process in a most cost-effective way making it one of the key successes. It has also helped that Safaricom is a trusted brand.

What are some of the challenges that M-Pesa has faced over the years?

Education has been the main one and it is a challenge we are managing quite well. This includes introducing a money transfer service that relies on a personal identification number and educating people not to share it. At the beginning banks were resistant but this is a hurdle we have overcome.

What are some of the factors that can be attributed to the mobile money not picking up in Uganda and Tanzania like in Kenya?

Not all markets are the same. There are different cultures, different economic environments so the take up will be different but in Tanzania I think it has picked up pretty well.

Vodafone does not operate in the Uganda market but in Tanzania person to person transactions grew over 400 per cent last year and Vodacom’s mobile user marketshare is about 40 per cent.