Edward Tagoe

About the author : Edward is one of Africa’s young software entrepreneurs. He is a co-founder of an Internet start-up in Ghana and loves poetry.

Why there might not be another mPesa in Africa

Africa, Entrepreneurship and Business, Events in Ghana, Ghana, Tech Events, Technology in Africa

mPesaIt’s hard to tell the African tech success story without listing m-Pesa in the flock. Created in March 2007 in Kenya by Vodafone for Safaricom (a local telecom in which Vodafone owns minority stake) m-Pesa is mobile service which allows mobile users (with smart or feature phones) to deposit money into an accounts stored on their cell phones, pay for goods and services including bills and items displayed by online merchants and redeem deposits . With this, in the hands of the user, the tool is not just a remittance service , but also a wallet which which payment can be made, what has turned out to be a difficult puzzle for many other tech communities without m-Pesa.  M-pesa has been exported to other markets where Vodafone operates. These markets include Tanzania, South Africa and India. Mpesa has grown to be such an integral part of the Kenya economy, it has boosted the Silicon Savannah’ GDP by a significant margin.

M-pesa is not all white. Users have complained about its service charges. This has turned out to be a hole other competitors intend to exploit.

In my conversations with many mobile users in Ghana and elsewhere, we often come by the question, ‘why haven’t we seen an m-Pesa like product in Ghana?’.  Though there are some mobile money solutions which, they all fall short of the utility provided by m-Pesa. Telecoms in Ghana though they realise high volumes of transactions, these mobile money services struggle to present themselves as payment options for bills and online products and services. Here are the major factors which pushed m-pesa to fame.

The Central Bank was asleep : In 2007,  mobile money was very new on the continent. Commercial banks didn’t realise how it was going to impact its revenue and operations. There are rumours about how Executives of some Kenyan banks lobbied the nation’s central bank to have m-Pesa audited and restricted. Unfortunately, the restrictions and policies on m-Pesa, came months too late. The product had gotten traction and was already on millions of mobile phones before the central bank could regulate it. This has turned out to be a lesson for other central banks in other nations. Banks are now on the look-out and more hostile to mobile money operations in their regions. And this is what will make it harder for an m-Pesa like service to rear its head in Ghana or any other part of the continent for that matter. Following the m-Pesa success, central banks require Mobile money operators to obtain banking licenses to launch and operate such a product.

Recently, a new instrument introduced by the central bank in Ghana seeks to help with this challenge. By giving more autonomy to Mobile money operators, the Bank of Ghana hopes to improve their services. Let’s keep our fingers crossed and see what barriers we can break with the new development.

DFID’s helping hand : Though not too many people highlight this, we cannot erase from history, the almost 1million pounds grant given donated by the Department for International Development (now UKAid). This social impact grant was focused on getting the unfortunate class in Kenya to access financial services on mobile. With such support financial burden of the development team was reduced, making it easier to increase user up-take.

2007 Misfortunes : Though the 2007 electoral and political crisis is a dent in Kenya’s history, it went a long way to get a lot more Kenyan’s to explore options to make their everyday lives easier. In fact, the success of two of Kenya’s biggest tech project’s, m-Pesa and Ushahidi can be linked to the 2007 crisis. With disruptions in banking services, Kenyan with mobile phones turned to m-Pesa to send and receive money, access services and simply stay alive.


Kenya’s Banked population : Out of 26 million Ghanaians, only 4million are banked. I always lament the pressure Ghana’s 27 commercial banks put on the banked population. Kenya fortunately has a bigger banked population. More than 50% of Kenya’s population is banked, this has contributed to a registration of  more than 17 million accounts on m-Pesa in Kenya. Banked consumers find the use of mobile money services easier to use since the learning curve is not as steep.

With Ghana’s cash dependent economy and struggling consumer mobile ecosystem, perhaps it is important for stakeholders to introduce a service which which a majority of the local market can access the basic utilities m-Pesa provides.



Related Posts