By Elaine Reinke and Silvia Sperandini
“I don’t need to go to the bank, I have the bank in my phone.” This is what all the actors in the Kenyan livestock and meat value chain have in common: they use M-PESA. On our journey of good practices across Kenya, the learning route participants discovered why this innovative solution has not only revolutionized the Kenyan business sector but also facilitates market access of rural pastoralists and livestock traders day by day.
Since 2007, Safaricom (Vodafone group) leads the way with an electronic money transfer system based on SMS messaging that has changed the lives of millions of Kenyans across all demographic and social segments of the population including the rural poor. M-PESA allows quick, easy and immediate payments from one person to another and from individuals to businesses, from supermarket expenses over electricity bills to school fees and remittances. To exchange e-money into cash and vice versa, customers use M-PESA kiosks to deposit or withdraw bank notes when needed.
For pastoralists and livestock traders in rural areas M-PESA has innovated their way of making business. Even who is miles from the next commercial bank and moving cattle along remote grazing areas and trekking routes can now transfer money back home anytime or easily sell livestock without the risk of carrying cash over long distances as well as reducing debts and delayed payments caused by promissory payments.
The success of M-PESA among pastoralists also links back to the availability of mobile network coverage even in remote areas and prevalent use of mobile phones in pastoralist communities. Thanks to this technology pastoralists are now connected to their family and friends, can quickly find out where to bring their cattle for grazing instead of roaming in search of water and pasture, and communicate with their business contacts at livestock markets while still at rangelands, saving time for other income generating activities and household chores.
Today, 15 million M-PESA customers use about 28,000 agent outlets countrywide for cash disposal and withdrawal. Safaricom’s innovation started as a small pilot project which now transfers more money than all Kenyan commercial banks together.
Designed to reach the poorer segments of the population who are not able to access the formal banking system, it is also becoming important gateway to enter into the commercial banking system since Safaricom in collaboration with Equity Bank introduced M-Kesho. This innovative banking product offers a bank account that includes micro-savings, micro-credit and micro-insurance products. M-PESA customers who join M-Kesho can also withdraw cash from the bank using their M-PESA accounts, save money and obtain small loans using the MPESA e-money as guarantee.
But what is it that made M-PESA such a success here in Kenya, while the uptake in other countries in the region remains relatively low?
This is one of the questions the “ruteros” discussed with our hosts of this case which include local M-PESA agents, maasai pastoralists, livestock and meat traders. Enabling factors which emerged from the discussion are the investment and commitment of Safaricom but also the entrepreneurial culture and readiness of the business sector and supportive government policy.