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MKesho: Linking Banks and Mobile Payments

People are excited about M-Kesho (money for the future) which launched yesterday, where Safaricom has linked their mobile payments service Mpesa as a joint venture with Equity Bank in Kenya. This basically extends Mpesa into a bank and insurance company, with the future offer of microcredit as well.

Equity bank has 80 branches in Kenya.
Mpesa has 17,500 outlets in Kenya.
There are approximatey 8.4 million bank accounts total
Equity has about 4.5 million bank accounts
Mpesa has 9.5 million users
Kenya has 107,000 credit cards in circulation

See the pattern? These are are big companies with huge local connections and inroads into the popular culture. This is a strong indicator that every Kenyan will have access to banking and insurance via mobile phone very soon.

“This is a bank account introduced by both Equity and Safaricom where customers can earn interest from as little as 1 Ksh. Customers can withdraw cash from their Equity Bank Account to their Mâ€PESA accounts and customers can also deposit through their Mâ€PESA accounts to their Mâ€KESHO Bank account. Other features of the account include Micro credit facilities (emergency credit availed through Mâ€PESA), Micro insurance facilities as well as a personal accident cover that translates into a full cover after 1 year. For one to open this account, the person must be an Mâ€PESA subscriber.”

Reality Check

As others have pointed out, there have already been links between mobile payment systems like Zain’s Zap and banks like Stanchart. So, this isn’t exactly groundbreaking and new. Why is it big then? It’s big because of who is doing it: the giants of the banking and mobile sector.

Rombo has written a particularly good post about M-Kesho. She asks some hard questions, like who really benefits out of this deal: Equity or Safaricom?

It’s hard to say, but I wonder if the pressure put on by regular banks onto the regulator about how close to a bank Safaricom’s Mpesa really has forced their hand. Did they have to choose a banking partner in order to stave off the regulator, or did they do it to increase market share and positioning?

Finally, I think this move, like the moves made by Safaricom in the past on this mobile banking space are shortsighted. Yes, it gets them more subscribers and it does solidify their grip on the mobile market in Kenya, that is working. However, mobile money and payments are much bigger than just one operator or one bank. Becoming the “Visa of the mobile payments space” all over Africa (the world?), is a much bigger deal than being the biggest fish in Kenya’s small payments pond.

The (Small, Slow and Sufficient) $99 “Africa” Laptop

December 16, 2009 / HASH / 43 Comments

Just in time for Christmas, a new low-cost, low-power netbook is hitting the scenes that actually retails for only $99. Cherrypal, the company behind it, has dubbed it “Africa”, as they’re focusing the little computer on developing countries. As the company states, this is a “no thrills” laptop – it’s basic and won’t be attractive for most of the tech people reading this blog for their own heavy use.

“At just $99, the new 7â€ Cherrypal Africa is one of the best buys in the world of electronics. Created with developing countries in mind, the Africa is our latest step toward closing the â€œdigital divideâ€, and weâ€™re extremely proud of this achievement. Whether you live in Ghana or Texas, the Cherrypal Africa is right for you! “

[Note the Texas bit? Yes, I thought that was funny too…]

The computer runs on a 400 MHz processor and features 256 MB RAM, 2 GB flash memory, Ethernet, Wi-Fi, two USB ports and can run either Linux or Windows CE operating systems. It has only a 7″ screen as well, so it’s not a monster that you’re going to be able to do a lot of heavy work on.

There’s always room for low-cost, yet usable, computers in Africa. I’m happy to see this operating as a real business, available to everyone.

The problem is distribution

It’s easy enough to buy one online if you’re from the US, but how does an unconnected, no-credit card (or PayPal) owning African buy one? Let’s be honest, here we need a store that you can walk into, cash in hand, and walk out with a computer. There is no payment mechanism that works beyond in-country mechanisms and delivery to any African nation will double the price of an individual “Africa” laptop.

What I’m trying to determine is the distribution model for getting these to actually be for sale in Africa for $99. Is it even possible?

UPDATE:
I just got in touch with Max Seybold, the founder of Cherrypal, saying the following:

“We can ship to Kenya for the same cost too, let us know.

We are looking into established distributors/resellers but also encourage schools and other organizations to sign up as distribution channel. This would be a win-win situation, since this organizations are in dire need to generate additional income and we could teach them how to promote and distribute the products. It’s a learning experience for all of us but we are willing to try unconventional approaches in order to help the cause.”

Any takers? I’d be interested, but not by myself.

Quick Hits Around African Tech

May 10, 2009 / HASH / 6 Comments

I’m thoroughly enjoying Dambisa Moyo’s “Dead Aid” book. Buy it, has great food for thought, and numbers to back it up.

The New York Times article on big web content companies lack of profitability in places like Africa.

We’re seeing a new trend of microblogging platforms emerge across Africa. Most recently in the Congo with Akouaba, but also in Nigeria with Naijapulse and South Africa’s Gatorpeeps.

Matt Berg writes about the “Off-grid solar calculator” in North Africa.

Mobility Nigeria points out that Nigeria displaces Germany in the Opera Mini top 10 list.

Bankelele breaks down some of mobile payment tool M-Pesa’s strengths and weaknesses in Kenya.

We’ve announced Ushahidi’s Beta stage, and another round of funding.

APC talks about the broadband rollout issues and a movement to change policy in South Africa.

Thoughts on Ecommerce Problems in Africa

June 29, 2008 / HASH / 23 Comments

Recently, I’ve noticed a sudden buzz about ecommerce in Kenya. Brian Longwe talks about the beginnings of this with Mpesa, emails are bouncing around between companies I know, and last week I spent a morning listening in to what the Kenya ICT Board and Federation had to say about it.

Let me start with the Kenya ICT Board. The meeting was basically about legislation and the fact that ecommerce would be good for Kenya. Of course it is, anything that lowers transaction costs for both buyers and sellers greases the wheels of commerce and increases the amount of trade across all industries and sectors. That’s a given.

But how? See, that’s the big sticking point that I’ve been banging my head against the wall over for 2 years now. It’s not enough that you can buy and sell with a Visa or Mastercard in Kenya. As long as you continue to ignore the wananchi (average person), then you’ll only help the wealthy and not see the real gains and advantages of a level playing field.

Which brings me to Brian talking about Mpesa, the mobile phone payment system in Kenya. For, in Mpesa, we have the beginnings of a payment system that can be used by everyone. He’s right about that. What’s wrong is that it’s mobile phone carrier dependent (Safaricom).

What we need is a carrier and bank agnostic ecommerce platform for Africa. Why?

Let’s go back to our “average person” again and talk about banks. They are generally unbanked (thus the use of Mpesa), or if they are, they have only a couple thousand shillings (less than $100) in the bank. The transaction costs for them having to keep their money in these aging institutions is often impractical. They have no, or very limited, opportunities to borrow money and they have no realistic way of getting any type of credit.

So, as can be seen, tying money, credit and debt to banks is not practical.

Now, let’s talk about why it needs to be carrier agnostic. This is even easier to understand. In Kenya there are two carriers; Safaricom (Mpesa) and Celtel (me2u). By the end of the year, there will be four. The barriers to use of a system that relies on one carrier is as ridiculous as requiring any payment system on the web to only go through one ISP. Sure, it makes sense if you’re that company to control that monopoly, but it’s bad for everyone else.

What does this mean then? Where do we go from here?

The upsides of a carrier and bank agnostic payment system is high. Not only would a system like this be used for the obvious domestic transactions (Kenya-to-Kenya) and external transactions (Kenya-to-world), but all of the sudden we have the ability to create real micro-loans and a new system to create credit scores for unbanked people over time. That’s wealth building, and it would transform Kenya.

Well, first off, let those who have the funds to do so, start building the right type of payment gateway. Start in Kenya and grow regionally, then continent-wide. It’s a semi-heavy investment (relative to who you are of course), but the return is absolutely insane. In fact, it’s ridiculous that after this long no one has done anything beyond build monopolies in this space.

[Note: My first post on this from 2 years ago]

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