Kenya leads the way in mobile payments

Kobus Ehlers, co-founder of Snapscan, says the firm is pursuing the large number of traders in SA who do not have access to the formal payment infrastructure.

THE race to develop mobile payment systems across Africa is spawning a new generation of technology entrepreneurs, searching for innovative ways to reach their customers.

From finance and farming to education and healthcare, dozens of apps are being created to overcome the continent’s infrastructure deficits and help meet the aspirations of an increasingly tech-savvy, urbanising population.

Lack of infrastructure--a key challenge but spurring innovation

"The conventional thing to say about Africa is it’s cursed by a lack of infrastructure," says Jesse Moore, CE of M-Kopa, a four-year-old Nairobi-based company that uses cellphone technology to lease off-grid, solar-powered lighting and power systems in Kenya, Uganda and Tanzania.

On the contrary, Moore argues, the continent’s old infrastructure deficit is spurring innovation. He points to M-Pesa, the mobile money transfer system pioneered by Kenya’s main telecoms company, Safaricom, which is 40%-owned by the UK’s Vodafone. M-Pesa is now used by 22-million Kenyans — or more than 70% of the adult population.

Safaricom entering logistics business

Safaricom is backing Sendy, a Nairobi-based package delivery start-up offering a marketplace for last-mile package delivery and logistics services, allowing customers to send packages and documents in the Nairobi area using a mobile application that connects them to motorcycle riders and drivers of vans and bakkies.

Much of this innovation has arisen from commercial necessity. Across Africa, telecoms companies have been forced to look for ways to boost revenues and retain subscribers as competition from rivals has driven airtime prices down.

Monthly M-Pesa transactions now total about $150m. While this accounts for a growing proportion of Safaricom’s business, it still represents only 20% of the group’s total sales. The platform earned Safaricom 19.4-billion Kenyan shillings ($18m) in the six months to September 2015.

But it has inspired dozens of copycats, such as SA’s SnapScan, a mobile payments system backed by Standard Bank. "The problem that we tried to tackle was that there is an enormous amount of businesses — about 400,000 of them in SA — who are trading today, but who don’t have access to the formal payment infrastructure," says Kobus Ehlers, one of SnapScan’s founders.

"So we tried to ask, well, how can we use technology to address that? Because that’s incredibly local, it’s a real problem — we’ve quantified the size of it — and now it’s a case of can we do something to address that?"

Head of Google Kenya to become Technology Minister

Joe Mucheru, who resigned in December as head of Google Kenya to become the country’s technology minister, says that despite myriad problems — from opaque regulatory systems to the shortage of skills — the success stories are likely to continue.

"Today we’ve got tens of incubators; there’s a lot of start-ups in place that are coming up with very innovative products," he says. "But they’re at their infancy. When they get to the seven-, eight-year space, they hopefully will be larger and be able to absorb a lot more capital. Then we’ll see real growth."

One of the best-known incubators is iHub in Nairobi, which has spawned 150 companies, including Weza Tele, a financial services tech company that was sold to SA’s AFB last year for $1.7m.

"There’s more to be done, but Rome was not built in a day," says Juliana Rotich, one of iHub’s founders. "Yes, in terms of listings on the Nairobi stock exchange we’re not there yet, but there are a lot of companies coming up."

The level of ambition among African technology companies is demonstrated by the fact that some are extending their horizons beyond the continent.

JourneyApps, a South African firm that started in 2009 by designing apps to support community health workers, last year opened an office in the US in a bid to transfer African technology to the US market.

Kenya's mobile money technology can be used in developed markets like the US

Conrad Hofmeyr, one of JourneyApps’ co-founders, says the demands in the world’s most developed economy are not always so different from those in Africa. "The kinds of attributes that we had to build into the product, like the fact that it works offline, that it’s very simple to use … it turns out that’s actually very useful for the US market as well, because now we’ve learnt things not in this theoretical bubble, but in this practical real-world challenge of operating in Africa," he says. "And we can go and take that valuable thing that we’ve built and use it in the US as well."

But with intra-African trade accounting for only 12% of trade on the continent, those involved in the technology sector are optimistic about the future.

"A lot of the solutions that are made in one country can be customised and provided to another country," says Rotich. "So, I still think there’s a lot of possibility … all over Africa, if we can be a bit more open."


About Mobile Money Transfers 2016 Conference & Expo

Mobile Money Transfers 2016 (15-16 September 2016, Nairobi) helps companies to successfully implement and monetise mobile payment channels by reducing the risk from oppositions from banks and regulators and security concerns over money-laundering and ensuring the availability of a reliable mobile-payments platform, whose business models build on M-PESA’s foundations.

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Mobile Money Transfers Kenya 2016



Mobile Money Transfers 2016 Conference & Expo

15-16 September 2016 | Nairobi, Kenya


Leading the world in mobile money innovation


Mobile money transactions in Africa stood for 63 percent of the total value and Kenya alone accounted for US$ 13.2 billion. Of the 31 million mobile subscribers in Kenya, 83 percent (26 million users) are subscribed to mobile money services. Communications Commission of Kenya (CCK), April 2014).


The crux to m-money services is the ability to a) transfer funds from one handset to another and b) deposit and withdraw cash via a network of local agents.


But m-money can be used in many other innovative ways. In Kenya, these include including paying utility bills or school fees, making in-store purchases, m-ticketing, phone top-ups, withdrawing cash from ATMs, sending money home from 45 countries overseas, people even have their wages and stock dividends paid into their account. All of this is achieved without needing a bank account, bank card, a smartphone or a post-paid contract.


Safaricom’s M-PESA service was the pioneer of mobile money in Kenya – and worldwide. Starting only seven years ago, M-PESA now has a reported 18.2 million subscribers, which would give it 73 percent of total mobile money subscribers in Kenya and, according to Mobile Transaction, today one quarter of the 44 billion dollar economy in Kenya runs through M-PESA.


All other Kenyan operators and some banks also offer m-money services. Safaricom made more revenue from M-PESA than from SMS and data put together.


Safeguard your mobile money business. Attend Mobile Money Transfers 2016 (15-16 September 2016, Nairobi, Kenya) by emailing or call (US) +1-917-512-2878  | (UK) +44-207-193-6310 | (SG) +65-9835-7914 to register.


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