M-Pesa is Our Hippo!

Safaricom’s mobile money transfer program, M-Pesa, received additional praise last week, but more emphasis was placed on how the service is causing grief to Kenya’s traditional banks. (One banker laments: “Money transfer on the cell phone is a great idea, but you do not allow innovation to outsmart regulation.”) With M-Pesa, mobile phone users can transfer money in increments as low as $1.25 for a small transfer fee.  Recipients can then withdraw cash from one of several thousand M-Pesa agents countrywide. 3.6 million Kenyans subscribe to the service, transferring approximately $2 million a day to friends and relatives around the country. Now the banks are complaining that excessive regulation prevents them from entering the market. These are the main points of the article, but a cursory reading would miss the readers’ comments, where the real action is.

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Where else (besides on the street) can you find raw anti-bank sentiments like “You closed our accounts and chased us like dogs. Don’t bark at us.” Or, for those who speak Kiswahili, “The sly person is in trouble when the fool gets smart.” And our favorite: “M-Pesa is our hippo,” a vote of confidence for M-Pesa that may also allude to the fearsome habit of the hippo to stomp on whatever comes between it and the river. These comments are a window into the attitudes of an important segment of the Kenyan population - technology-savvy users who can afford to spend time and money submitting comments to an online forum. They may not represent the masses but they can set trends that influence lower-income populations.

Indeed, Safaricom (40% owned by Vodafone) has significant popularity among Kenyans. This good will has been cultivated with blatantly nationalistic marketing and a refusal to block SMS text messaging during a political crisis in December and January. Now it seems the company is also benefitting from the impression that they are resisting the banks, where few Kenyans have had a positive experience. But popular support is not enough. Technology is innovating faster than regulation – and not just in East Africa. Like voice and text messaging before it, money transfers and other mobile services are being adopted quickly and widely only in countries where the regulatory environment allows or encourages them, and cross-border transactions are largely prohibited. Growth will come to mobile service providers who work within the regulatory environment and keep the pressure on government regulatory bodies by stressing the social benefits of their services. Quantifying the benefits of mBanking, mHealth and other mobile services may not win as many hearts as a patriotic advertisement, but it will solidify the support of critical partners in the private and public sectors.

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