The Christian Science Monitor has an Oct 12 article, Unserved by banks, poor Kenyans now just use a cellphone, about how Keynas are using cell phones to conduct banking. Cell phones allow Kenyans to transfer cash and conduct business across long distances. This trend is significant because mobile phone ownership is rapidly growing in Africa and today about 1/5 of Africa’s population has access to a mobile phone.
With a click of a cellphone key, Bernard Otieno makes the transfer – sending funds instantly from his residence in a sprawling Nairobi slum to his wife, who holds down their rural family farm some 250 miles away.
Mr. Otieno, a security guard who works the night shift, used to risk carrying cash on infrequent, slow trips to his hometown or pay high rates to send money through the post office.
Now, he’s one of a growing number of Kenyans tapping into a service called M-PESA – M for “mobile” and pesa for “cash” in Swahili. Launched this year, it’s one of the world’s first cellphone-to-cellphone cash-transfer services for people who lack access to conventional banks.
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Indeed, the initial success of M-PESA has surprised even those who helped set it up. “We have now [the number of customers that] we thought we’d have in January,” says Gerald Rasugu, the manager for all M-PESA agents nationwide. M-PESA serves more than 450,000 customers, well over the target of 100,000 set at launch, says Michael Joseph, CEO of Safaricom, Kenya’s largest cellphone provider, which started M-PESA. He expects to have 1 million customers by January. “I wonder sometimes if people understand how big this can be,” he says.
The potential goes beyond M-PESA and Kenya. Once poor people have more access to financial products offered through trusted banking systems, investors soon follow, creating jobs, say economists.
“There’s a very clear correlation between a more developed financial sector and GDP growth,” says Thorsten Beck, a senior economist at the World Bank in Washington.