Mobile money would transform even more lives in poor countries if regulators got out of the way
IN 2007 Safaricom, the biggest mobile operator in Kenya, launched M-PESA, a service that allows money to be sent and received using mobile phones. It has since signed up 15m users, is used by 70% of the adult population and has become central to the economy: around 25% of Kenya’s GNP flows through it.
Similar schemes have had some success elsewhere. More than 120 mobile operators now offer mobile-money services of various kinds, and another 90 will soon join them. There has been a particular push in east Africa. Yet in many poor countries where mobile money should be flourishing, it isn’t.
A bank in your pocket
Mobile-money services are especially useful in developing countries. A worker in the city can send money to his family in the village without having to waste a day travelling on a rickety bus. Indeed, he can pay his family’s household bills directly from his phone. It is safer too: nobody wants to carry wads of currency on public transport.
Mobile money also gives its users—many of whom are poor and have no access to banks—a way to save small amounts of money. A World Bank report found that M-PESA users are a third more likely to have some savings than their peers. Mobile transactions are more traceable than cash, making it harder for corrupt officials to embezzle undetected. And lately Kenya has discovered a further benefit: the success of M-PESA has provided the foundation for a group of start-ups in Nairobi that are building new products and services on top of it (see article).
However Kenya’s success has yet to be replicated much elsewhere. More than half of all the world’s mobile-money transactions are handled by Safaricom. Mobile money is popular in one or two chaotic countries, such as Sudan and Somalia, but barely used in most places where it could do immense good, including India and China.
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