The Mobile Wallet

When Michael Joseph started Safaricom in 2007 he invested three million dollars in a venture that no other investor had interest in. Four years later, that venture known as Safaricom, a leading mobile network subscriber, has evolved as the central player in mobile banking in Kenya and financial inclusion around the world with 12 million subscribers. Panelists at a recent  Brooking event on on mobile technology described the need for the private sector to invest in technological infrastructure and for donors to take risks in investments.

More than one billion people in the world have access to mobile phones but no access to financial services. Mobile technology represents the most dramatic, widespread and successful infrastructure in Africa; in the last decade alone cell phone accessibility increased from 10% to 60% of Africa’s population.

M-Pesa (pesa means money in Swahili), is a mobile phone based money transfer system, a joint venture between global telecommunications giant, Vodafone and Safaricom. Here’s how it works: users load money onto their phones at M-Pesa vendors and then send it to other users through an SMS (text message). Users can then pick up their cash at the nearest local vendor. M-Pesa also allows microfinance borrowers to receive and repay loans through Safaricom’s airtime re-sellers network.

What’s all the rave about? The “mobile wallet” saves time and is considerably safer than cash transactions. No longer do people have to carry around large sums of cash to banks that are half a day’s journey away. Also, M-Pesa facilitates financial inclusion: people without access to a bank can now use the M-Pesa service.

On the humanitarian front, mobile technology helps communication efficiency between aid activity on the ground and NGO staff elsewhere. For example, the Red Cross in Kenya can measure progress projects daily through text messages. This technology also allows aid organizations to more quickly respond to disease outbreaks.

Similarly, the Mobile Alliance for Maternal Action, initiated by the State Department, provides mothers-to-be with important care information and tips. In addition to sending women SMS’sduring their pregnancy about safe pregnancy and delivery practices, the cell phones can also track where mothers are. This is crucial during a childbirth emergency when assistance from a health care worker is essential for the survival of mother and child. The use of mobile technology in humanitarian contexts is central to optimum economic growth for Africa.

No matter how long it takes donors and the private sector to actively engage in mobile technology, it is here to stay.

To learn more about M-Pesa in Kenya and how mobile banking works, check out this BBC video as well as the World Economic Forum’s recently released Mobile Financial Services Development Report 2011.

Is your organization using this technology to communicate from the field? Is there anything we can learn from M-Pesa or the State Department's program?

By Megha Bhatt, InterAction Intern