M-Pesa is The Very Boring Tip of a Very Big Iceberg

Celebrating the success of M-Pesa, Safaricom’s cel-phone based payments platform from Kenya, is the stuff of development cliché by now. Less often noted is the odd fact that similar services, though they’ve been introduced in most African markets, have failed to take off in anything like the way M-Pesa did back home.

What the iPhone did to stupid time-wasting games, M-Pesa can do to all kinds of financial services in Africa.

This McKinsey analysis shows revenue for mobile operators from phone-based payments could nearly double in Africa just by bringing other countries’ mobile payment penetration to the level of Kenya’s.

The potential is obvious. “54 percent of adults in sub-Saharan Africa make one or more long-distance payments in a given month,” the report says, citing a Gallup survey. We’re talking three-quarters of a TRillion dollars being remitted around the continent each year, 60% of it in cash. (And people say there’s no money in Africa!)

The McKinsey report is eye-opening in terms of scale. But its narrow focus on payments is grating. Once you have a mobile payments platform, you already have the rudiments of a mobile financial services infrastructure very literally in the palm of people’s hands. So why on earth would you stop at payments?

When you think about it, payments are the least interesting part of it. We need to start thinking of M-Pesa not as a payments platform but as the leading edge of an mobile-based mobile finance ecosystem.

What the iPhone did to stupid time-wasting games – i.e., not provide them, but provide a platform that allows others to provide them – M-Pesa can do to all kinds of financial services in Africa.

Because there are gaps and missing markets for financial intermediation all over the place in Sub-Saharan Africa.

Take something like saving for a health emergency. Research shows extremely high take-up rates for any offer to help people establish a health savings account to deal with emergencies, and proves HSAs are effective at helping the poor cope with ill health.

There’s a massive un-tapped market there, and one thing I can tell you for sure: if anyone ever figures out a way to make it work at scale, it’ll be by piggybacking on the M-PESA ecosystem.

Yes, there are regulatory hurdles. But hurdles are made to be jumped over. Stopping at payments is senseless. There’s so much more to do. And, again, Kenya is leading the way.

One thought on “M-Pesa is The Very Boring Tip of a Very Big Iceberg”

  1. How about mPesa+bitcoin/bitcurrency for unboring ecosystem applicability. Not because Kenyans want or need a new currency. But because of the pretty inviolable transaction record of the distributed blockchain. So health savings accounts, health or other micro insurance premiums…

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