M-PESA mMoney service - impact and usage in Kenya

by Karen Coppock
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CGAP recently published an interesting brief, Poor People Using Mobile Financial Services: Observations on Customer Usage and Impact from M-PESA - about M-PESA in Kenya.

Some interesting tidbits from the brief:

• Money is usually sent from urban to rural areas: as to be expected, most funds are transferred from urban to rural areas with urban residents (generally men) adopting the service and then encouraging their relatives in rural areas (generally women) to use it.

• There are some wrinkles in the service: not all text messages (money transfers) go through and not all rural agents have cash on hand...both of which cause frustration with the service

• Outcomes are mixed:
• positive - increased income levels among rural users, more frequent and smaller transfers, women's empowerment due to ease of requesting and receiving funds and M-PESA acts as a savings account or feeds into a savings account to increase savings and financial security
• negative - men tend to travel home to rural areas less often to deliver funds as they can now do it via their mobile...women back home fear that their husbands will take up "city wives" and stop sending them money or that they will have to share limited funds with these new spouses.

The unexpected result of the technology potentially decreasing rather than increasing existing relationships is an unfortunate finding.  Regardless of the final verdict on this issue, it is important to have a reference point on mMoney usage and impact as mMoney solutions are rapidly spreading across Africa and other developing nations.

Western Union Joins Mobile Remittance Market

Western Union has been so slow to respond to the market impact of mobile-phone based remittances, the company risks losing decades of market leadership in the money transfer business. The recent announcement of a partnership with the GSM Association (GSMA) may be an attempt to catch MasterCard, which announced a similar initiative at the 3GSM conference in February. According to Reuters, Western Union and GSMA will help operators let customers transfer funds from a mobile phone to a Western Union location and vice versa, and enable mobile-to-mobile transfers. A pilot program of the service will be available by mid-2008 and Western Union expects to see a material contribution to revenues in 3-5 years.

Western Union’s slow rollout of a mobile remittance program opened the door for companies like Visa, MasterCard, banks, and local service providers. Mobile-to-mobile money transfer programs are already generating revenue for more nimble players like Smart in the Philippines and Safaricom in Kenya, among others. By 2012, the number of recipients of international remittances could reach 1.5 billion and the size of the remittances market could total US$1 trillion, according to GSMA.

Non-technology companies like Western Union are being drawn into the telecommunications market by the increasing utility of mobile phones. The GSMA, its members and other mobile technology companies will benefit from new partnerships with global non-technology companies like Western Union. They provide valuable assets such as global brand and new services that can now be delivered via mobile technology. Association with a strong brand like Western Union can allay customer fears associated with accessing services and executing transactions via mobile phones. And, the added services present opportunities for additional revenue sources for all involved partners.

Also in the news:

• Mitec plans to enter low-cost PC space
• Eee PC makes a hot debut
• Norhtec thin client surfaces again

Remittances to fund mobile phones and minutes - why not PCs?

Posted by Karen Coppock
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NPR had a story on electronic money transfer service, Mukuru, this afternoon. Mukuru allows the immigrant community to send money - in the form of gas vouchers and mobile phone minutes - to their relatives back home in Zimbabwe.

The Mukuru business model is not new. Several firms, including MamaMikes of Kenya and Thamel.com of Nepal, enable immigrants to direct their money transfers to specific purchases or purposes. This phenomena is commonly referred to as the "productive use of remittances," which is somewhat of a misnomer as the companies offer gifts such as roses, candy and televisions as options.

In all three cases - Mukuru, MamaMikes and Thamel.com - the company accepts the money transfer request online, hence taking advantage of the technically savvy immigrant population. The family member back home then receives a text message notifying them that they have a gift or voucher waiting for pick-up. Thamel.com adds an extra touch of delivering the gift and then sending the immigrant a picture, or video, of the family member with their new gift or voucher in hand.

Mobile phone minutes are gift options on all three services, which is logical given that mobile phone minutes are an alternative currency in many poor countries. Thamel.com and MamaMikes also offer many brand-name mobile handsets as gift choices. None of the three firms have brand-name PCs as gift options - perhaps a missed opportunity for computer companies interested in reaching the next billion consumers in emerging markets.

Google Looking for Traction with Online Apps

March 28, 2007

Google Looking for Traction with Online Apps

At the ICT for Sub-Saharan Africa Conference in San Francisco last week, Google’s Internet strategist Vint Cerf announced that the company will offer free Google Apps to universities in Kenya and Rwanda. Over 200,000 students and government employees will have free access to online applications such as G-mail, Google Docs and Spreadsheets, Talk, Calendar and Page Creator.

Google would clearly like to break Microsoft’s hold on desktop applications by making them web-based services. In Africa, they are searching for globally-viable marketing, pricing and distribution models. They’re also testing the acceptance of new models in a key demographic – university students. Vital Wave Consulting research confirms that that education is a high-growth segment for ICT in developing countries. And its connection to other market segments makes this a strategic play for Google.

Microsoft is not asleep at the wheel. The company hosted the “Under the Radar” conference last week, at which several start-ups demonstrated online applications that would complement or rival MS Office. If Google and/or Microsoft change the desktop software business model to web-based services, there will be an excellent opportunity for smaller developers to offer emerging-market buyers online applications with a competitive price, locally relevant uses, and the right mix of services.

Also in the news this week

• Cisco Capital extends its “Easy Lease” program to Turkey to spur SMB sales and increase the capacity of channel partners.
• SmartMoney and BusinessWeek discuss how HP and Dell are cutting into the Chinese PC market.
• Peripherals in India see remarkable incremental growth in ‘06.