In 2007, Safaricom developed the M-PESA app in Kenya, Africa. The mobile money platform aims to increase financial inclusion by allowing the impoverished access to financial services without the need to visit a bank or have a bank account. The introduction of the M-PESA mobile money app has improved the economy in a nation with about 16% of the population surviving on less than $1.90 per day in 2021.

The M-PESA App

Accessibility is one of the benefits M-PESA offers. The app is accessible to both individuals and businesses and even those living in rural villages can easily access it as long as there is mobile connection coverage. Through the app, users can send and receive money, purchase airtime and pay bills, among other services. M-PESA also “facilitates the safe storage and transfer of money.”

A study conducted by an economics professor from Georgetown University and a colleague from MIT shows that 96% of the Kenyan population used the M-PESA app in Kenya in 2016. By 2021, the app had roughly 30 million users in Kenya alone. The M-PESA app expanded to six other African countries and served 50 million users across the African continent by September 2021, making it the largest fintech in Africa.

Benefits of the M-PESA App

M-PESA is able to improve a country’s financial outlook by reducing poverty. The app allows users to take control of their finances and increase consumption levels of goods and services. A research article, “The Long-Run Poverty and Gender Impacts of Mobile Money,” published in Science magazine in December 2016, indicates that over six years M-PESA “increased consumption levels,” which allowed about 186,000 Kenyan families (2% of Kenyan households) to rise out of poverty.

The researchers conducted a study from 2008 to 2014 to compare households with easy access to M-PESA agents to “those without such easy access to mobile money.” The result showed that households with easy access to M-PESA agents “fared better and received more remittances from a larger network of people.” Highlighting this, when Kenyan households endured a financial shock, “there was a 12[%] difference in per capita consumption between the two groups, with consumption rising for those households near to an M-PESA agent.”

In Kenya, about 25% of the $44 billion economy goes through M-PESA, according to a 2014 article by Mobile Transaction. Furthermore, by the end of 2013, more than 79,000 people received opportunities to work as M-PESA agents. By 2018, the World Bank noted more than 110,000 M-PESA agents in Kenya.

Mr. Mungai, who operates two M-PESA shops in Kenya, told the Mobile Transaction that the app had made his life much easier and provided him with a stable job. “M-PESA has changed my life; it helps me make savings. I don’t need to travel to and from the bank every now and then because I can now deposit and withdraw from my bank account using the M-PESA platform,” Mungai added.

Evolution of the M-PESA App

The functions of M-PESA have been evolving. In 2021, M-PESA Africa launched the M-PESA Super App, which allows users access to “services they need in a typical day including shopping, restaurants and food delivery, transport services, government services” and more, without the need to install several apps. By March 2022, more than 9 million individuals and 320,000 businesses had downloaded the M-PESA Super App.

In addition, M-PESA has grown from peer-to-peer money transfers to international payments. M-PESA has partnered with MoneyGram on International Money Transfer, allowing users in more than 90 countries to transfer money across borders. Now people are able to enjoy the services and updates of the app without a SIM card. M-PESA is also collaborating with PayPal, and soon, the mobile money app intends to expand further through partnerships with other global brands.

Looking Ahead

With the M-PESA app in Kenya, Kenyans can look to a brighter future and an improved economy through easy access to financial services and increased job opportunities. Overall, M-PESA increases financial inclusion, ensuring that the impoverished in developing countries in Africa have access to the resources and services to break the cycle of poverty. M-PESA will continue to bring innovations and enable individuals to make transactions more efficiently and securely.

– Jiaying Guo
Photo: Wikimedia Commons