M-PESA

M-Pesa (M for mobile, pesa is Swahili for money) is a mobile phone-based money transfer, financing and microfinancing
service, launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and
Tanzania.[1] It has since expanded to Afghanistan, South Africa, India and in 2014 to Romania and in 2015 to Albania. M-
Pesa allows users to deposit, withdraw, transfer money and pay for goods and services (Lipa na M-Pesa) easily with a
mobile device.[2]

The service allows users to deposit money into an account stored on their cell phones, to send balances using PIN-
secured SMS text messages to other users, including sellers of goods and services, and to redeem deposits for regular
money. Users are charged a small fee for sending and withdrawing money using the service.[3]

M-Pesa is a branchless banking service; M-Pesa customers can deposit and withdraw money from a network of agents
that includes airtime resellers and retail outlets acting as banking agents.

M-Pesa has spread quickly, and by 2010 had become the most successful mobile-phone-based financial service in the
developing world.[4] By 2012, a stock of about 17 million M-Pesa accounts had been registered in Kenya. By June 2016,
a total of 7 million M-Pesa accounts have been opened in Tanzania by Vodacom. The service has been lauded for giving
millions of people access to the formal financial system and for reducing crime in otherwise largely cash-based societies.
Safaricom PLC is a listed Kenyan mobile network operator headquartered at Safaricom House in Nairobi,
Kenya.[1] It is the largest telecommunications provider in Kenya, and one of the most profitable companies
in the East and Central African region.[2] The company offers mobile telephony, mobile money transfer,
consumer electronics, ecommerce, cloud computing, data, music streaming, and fibre optic services. It is
most renowned as the home of MPESA, a mobile banking SMS-based service.

Safaricom controls approximately 64.2 percent of the Kenyan market as at December 2018 .[3][4] Safaricom
had a subscriber base estimated at approximately 31.8 million.[5]
The Rise of Silicon Savannah

Most discussions of the origins of Africa’s tech movement circle back to Kenya. From 2007 through 2010 a combination of circumstance, coincidence, and visionary
individuals laid down four markers inspiring the country’s Silicon Savannah moniker:

Mobile money,
A global crowdsourcing app,
Africa’s tech incubator model; and
A genuine government commitment to ICT policy.
In 2007, Kenyan telecom company Safaricom launched its M-PESA mobile money service to a market lacking retail banking infrastructure yet abundant in mobile
phone users. The product converted even the most basic cell phones into roaming bank accounts and money-transfer devices.

Within two years M-PESA was winning international tech awards after gaining nearly six million customers and transferring billions annually. The mobile money
service shaped the continent’s most recognized example of technological leapfrogging: launching ordinary Africans without bank accounts right over traditional
brick-and-mortar finance into the digital economy.

Shortly after M-PESA’s arrival, political events in Kenya would inspire creation of one of Africa’s first globally recognized apps, Ushahidi. In late 2007, four
technologists — Erik Hersman (an American who grew up in Kenya), activist Ory Okolloh, IT blogger Juliana Rotich, and programmer David Kobia—linked up to see
what could be done to quell sporadic violence as a results of an inconclusive presidential election.

Notable as it has become, Silicon Savannah is but one corner of Africa’s tech movement.

Over a three-day period the techies came up with the Ushahidi app (meaning “witness” in Swahili) to digitally, rapidly, and publicly track outbreaks of violence
during Kenya’s election crisis.

The Ushahidi software that evolved became a highly effective tool for digitally mapping demographic events. As Kenya shifted back to stability, requests came in
from around the globe to adapt Ushahidi for other purposes. By the end of 2008, the app had become Ushahidi the international tech company, which now has
multiple applications in more than 20 countries.
Soon thereafter Erik Hersman would flesh out the ideas that spurred Africa’s innovation hub movement. He wrote in a
blogpost to other techies, that what African tech needed was “permanent community spaces. Hubs…in major cities with a
focus on young entrepreneurs. . . . Part open community workspace (co-working), part investor and VC hub and part idea
incubator. The nexus point for technologists, investors, [and] tech companies.”

These exchanges hatched the iHub innovation center on Nairobi’s now African IT–synonymous Ngong Road. Since 2010 152
companies have formed out of iHub. It has 15,000 members and on any day, numerous young Kenyans work in its labs and
interact with global technologists such as Yahoo CEO Marissa Mayer (a past speaker). iHub gave rise to Africa’s innovation
center movement, inspiring the upsurge in tech hubs across the continent.

Rounding off Silicon Savannah hallmarks M-PESA, iHub, and Ushahidi was the completion of the TEAMs undersea fiber optic
cable, which arrived in Mombasa in 2010, and significantly increased broadband in East Africa.

The project was largely the vision of Kenya’s then Permanent Secretary in the Ministry of Information and Communications,
Bitange Ndemo, who saw benefits in “developing Kenya’s Information Communication Technology (ICT) infrastructure toward
the country becoming a regional ICT hub.” An ICT master plan he shaped in 2006 would eventually became the template for
the Kenyan government’s strong commitment to ICT policy. By 2013 Kenya formed its own fully staffed ICT Authority.
ADDONS CHALLENGES

BD & MKTNG APPROACHES Ventured into new mkt
segmnets
GLOBAL NETWORK Diversifying the product,
extend to new
mktsgements
15% TO 20% ADDRESSABLE MARKET Removed transation fees
SIGNIFICANT UPFRONT COSTS
MANAGIG FLOATS BETWEEN RURAL
AND URBAN AGENTS
High prices for low income groups,
competitors penetrated

GROW CUSTOMER BASE & NETWORK OF Improved customer eng & lifetime
AGENTS values, save on opp cost
E-COMMERCE High customer adoption rte

PRICING STRATEGY TO PULL YOUNG To overcome issues, features were

AMRJET-BLAZE TARRIF continuously added
Trust& loyalty-refunds for dropped calls

Facilitated operations for 1000s of small

business
Inclusive business practices
Integrating low income seg into main
economic stream
Country specificities
Growth areas Value
proposiyion
Lveraging big Sneding &
data and digital recieveng
innovations money through
moile