The mobile money revolution: M-Pesa

Ben & Alex
5 min readJun 15, 2018

M for mobile, Pesa for money in Swahili

M-Pesa are the five letters you will see all around Kenya, from Kisumu to Mombasa. This is the main mobile money in Kenya with more than 20 million users in 2017.

@Brian Harries /Flickr

In the face of one of the lowest banking penetration rate in the world and the dominance of a cash society which increases the risk of being robbed, Safaricom (40% owned by Vodacom entities), launched M-Pesa in 2007.

To ensure a fast penetration rate, Safaricom came up with a very simple system where you can send money to any users through a simple text message and a dedicated PIN. No need for the last iPhone, nor a 5G debit or simply Internet, your good old 9-key Nokia with a one bar service does the job. The success is astonishing with more than 350,000 clients using the service within the first year of operation.

The Regional Economic Service of the French Embassy at Nairobi finds that “Every second, around 900 transactions are conducted through M-Pesa. In total, the service conducts 68% of all the country monetary transactions, representing a value of 7% of all amounts transiting through all means of payment of the Kenyan banking and financial system. This represents 25 billion USD every year, equivalent to slightly more than a third of the country’s GDP.”

How to explain such a success: Safaricom’s firepower

M-Pesa success can notably be explained through Safaricom’s (the telecom operator behind M-Pesa) dominant market position. In 2018, Safaricom still holds a market share close to 70%, in 2007 at the launch of M-Pesa they enjoyed an astonishing 84% market share. Kenya also benefited from a 70% mobile phone penetration rate in 2007.

The role of the Kenyan government – who owns 35% of Safaricom – and regulators cannot be understated in the development of mobile money. When the Kenya Bankers Association was strongly against the launch of M-Pesa, the Ministry of Finance published a letter of non-objection stating that M-Pesa was not a banking service.

Finally, this success is also explained by a strong and reliant network of agents throughout the country. Today, there are more than 152,000 agents ready to cash in or cash out your money on the platform. The agents literally become your ATM while your SIM card becomes your credit card.

Safaricom is also pursuing a very aggressive advertising campaign across Kenya

How to explain such a success: a real need from the population

M-Pesa directly answers specific needs from the Kenyan population. The strong rural/urban divide is increasing due to the rural exodus which sees the youth migrating to the cities in the search of better economic opportunities. The ones who stayed in the countryside often receive money from the younger ones living in the cities. These transfers were carried by unreliable and costly courier services. M-Pesa fixed this issue.

Another factor contributing to M-Pesa’s rapid success is the scarce access to traditional banking for Kenyans. In 2006, only 26% of the population had access to formal banking. The remaining were either completely excluded from the banking system (38%) or were using very costly informal banking services such as pawnbrokers (36%). Since the launch of M-Pesa, who automatically creates a bank account for each of its user through its partner bank CBA hosting the funds (when using M-Shwari), the access to financial services in Kenya is now one of the highest in Africa (75% in 2015).

Later developments

If M-Pesa was originally a simple money transfer service between individuals, Safaricom soon launched a multitude of interrelated services: from payments when buying in the formal economy shops (from KFC to your hairdresser) using Lipa Na M-Pesa, to micro-credits available through M-Shwari. M-Pesa also created numerous partnerships with other companies and government services. It is now possible to pay your electricity bills, to send money through Western Union and even to pay your taxes (i-Tax).


M-Shwari acquired 9 million users and supplied more than 20 million micro-credits in Kenya. By analyzing your M-Pesa transactions, Safaricom, through its partners, will offer you loans at a personalized and competitive rate. For example, if you regularly go to the restaurant and pay through M-Pesa, your treasury is deemed reliable. M-Shwari will then be able to offer you a loan at an interesting and more competitive rate. M-Shwari also support small entrepreneurs by giving quick them quick loans which enables them to acquire a commercial space or an inventory.


Even though M-Pesa has an 81% market share in Kenya, it is not alone in the mobile money market in Kenya and Africa. Orange Money, Equitel Money, Mobile Pay, Airtel Money and Mobikash are also present. Equitel Money, service co-launched by Airtel (telecom company) and Equity Bank is the most developped competitor but its market share remains at a low 7% in Kenya.

Most of the African countries have their own set of mobile money launched by their respective telecommunication companies. It’s worth noting that Zimbabwe, due to its complicated monetary crisis, has had 81.2% of its transactions in 2016 going through mobile money, from which more than 97% where processed by Ecocash (launched by Econet).


M-Pesa is a classic example of leapfrogging. Leapfrogging is the idea that a country can skip an entire technological stage. Its most famous example is how Africa completely skipped landlines to directly leap to mobile phones. M-Pesa bypasses traditional banks and credit cards. Therefore, in Kenya, more than 70% of all transactions are conducted through mobile, way more than in developed economies.


  • Meeting with the Regional Economic Service attached to the French Embassy in Nairobi
  • Meeting with Thibaud Rerolle, CTO Safaricom
  • PwC Report “La révolution numérique au cœur de la transformation de l’Afrique”
  • Startup Lions, Au cœur de l’African Tech by Samir Abdelkrim, Xavier Niel, Tidjane Deme



Ben & Alex

We travelled from Nairobi to Cape Town to meet social and tech innovators on the ground. The goal is to picture the underlying drivers of development.