'M-Pesa': The Technical Transformation of Local Economics in Kenya Through Increased Money Mobility
Posted: 15 Apr 2013
Date Written: April 15, 2013
Abstract
Less than a decade ago, in Kenya, the preferred mode of small-scale business transactions was “cash in hand”. Though Kenyans could conduct business with whomever they pleased, it limited the when and the where of business, placing boundaries on the culture surrounding business relations and local economic growth. However, this started to change with the launch of M-PESA, a mobile-to-mobile money service in 2007. Within its first four years it had over 9 million users, rendering void the small business “cash only” slogan, in exchange for “M-PESA” or “Mobile-money”. M-PESA led to the start of a grassroots economic transformation, narrowing the gap between urban and rural Kenyans. Suddenly, anyone with a cell phone can send and receive money. Moreover, this service is not tied to a bank account and the cash is readily accessed at any of the 40,000 agents in little booths around the country.
This paper will examine how this new mobility in money transfer has altered some of the priorities seen as necessary in the financial sector to stimulate the economy, postulate as to why this new idea was so quickly adapted, and finally analyze how it changed the culture of business relationships in Kenya.
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