1 banks with values have models that invest in human productivity not debt; typically they redesign value chains to integrate community sustainabilty (rising expoenentials over time) or greatest future possibilities of net generation- mobile apps give huge opportunity for such interventions in most market sectors if practictioners explore this focus by focus mit has become the world;s number 1 job creation network through such practices

2 governments need to change from can't to can- the issue is not whether a ntaion is in debt but whether it it is tristed with net generation invetsments given the 10 times greater opportunities to invest in net generation technolgy and productivity of youth than ever before- governments who print money and then start credit chain off with big banks speculating in commodity or property bubbles clearly misrepresent their nation's future and the peoples need to rid themselves of such traps if their place is ever to grow again

3 mobile cashless banking is a one-off opportunity to get smart about how cuurencies start up whole productivity chains

4 social impact bonds are an innovation unlesahing dormant capital that elders have put into physical assets pf foundations (typically property) instead of actively investing in foundation's purpose by accelerating its future goals

5 a special sort of dormant asset is that tied up in universities- it is absolutely disgraceful to see universities creating jobless students byo getting them in debt with huge fees, and not using the resources they siit on to mobilise students, technolgy and professors out in society solving needs and creating jobs- the antidote to this is the failure of universities to lead open koowledge networking processes of post-industrialrevolution and to explore multi-win models which this transformation requires is not just a disgrace - it will likely lead to contraction of your nation's economyu at a time where youth could be empowered to be 10 times more productive - see our 1984 map on how to value net generation and help our search for 100 leaders of 2010s equals youth's most p[roductive decade - please keep asking in any positve youtth invetsment you see what role did or couild banks with values be playing

6 incubators. accelerators which bridge community and education insteitutes - and are designed arounnd the idea that only a very small percent of future jobs will come from passing exams and waiting for a big employer to offer you a job are something that banks with values should be benechmarking best of type xases of and bring to the localities or practice networks that they want to best in youth investing in

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M-PESA, its 12.2 million active customers, and 81,000 agent outlets have fundamentally altered the landscape of financial services in Kenya. More than half the adult population now uses M-PESA, which has contributed to a dramatic increase in the percentage of adults with access to formal financial services since 2009, when just 41% of adults had access. Now, this figure is at 67%.

Back in 2010, CGAP debunked some common misconceptions about the mobile money service. Overall, there is now a much better understanding of how M-PESA works, but there are still some misconceptions.

A mobile phone and Kenyan Shillings
Photo Credit: Erik Hersman, via flickr

1. Myth: M-PESA customer funds are held by Safaricom.

Many policymakers we speak with around the world are still concerned about the safety of M-PESA customer funds. The truth is that M-PESA funds are not held (nor used) by Safaricom. The funds are held by a trust which is owned by Vodafone, deposited in several commercial banks, and cannot be accessed by Safaricom. In the event of Safaricom going bankrupt, the creditors of Safaricom would not have access to the M-PESA funds. Safaricom is not even allowed to use the interest earned on these accounts. Instead, it has established the M-PESA Foundation to spend the interest. The Foundation aims to promote education, health and environmental conservation in Kenya.

2. Myth: since 43% of Kenya's GDP is sent through M-PESA, it must pose a systemic risk.

Many publications from the Economist to the Financial Times have quoted the large percent of Kenya’s GDP that flows through M-PESA. However, this statistic is misleading. First, the value of mobile money transactions quoted includes all aggregate flows both into and out of the mobile money system – so at the very least this statistic is double counting. More importantly, GDP is a measure of the value of goods and services an economy produces and does not represent the amount of money that had to flow through it to pay for these goods and services. In actuality, M-PESA flows are roughly equal to the transaction flows of one of Kenya’s larger commercial banks. This means that M-PESA is important, but does not necessarily pose a systemic risk. However, M-PESA’s reach across all economic segments of Kenyans, coupled with its high usage for financial transactions, means that the product’s security can influence public perceptions of safety and security of financial transactions.

3. Myth: Since M-PESA is so popular, most transactions in Kenya must be going through it.

Actually, cash is still king in Kenya. Although 62% of Kenyans are active mobile money users, among the 300 low-income households that took part in the recently released Kenya Financial Diaries, just 1% of expenditures (mostly airtime top-ups) and 3% of all transactions were made electronically. Although a broader ecosytem is growing to facilitate usage of M-PESA at merchants and to pay school fees, for example, it is still primarily used to send and receive money, buy airtime top-ups and as a transactional storage account.

4. Myth: M-PESA-related fraud and crime mostly impacts customers.

Fraud remains a concern, but maybe not in the way you think. Safaricom has aggressively tackled the fraud issue, which has helped to contribute to reduced incidences of fraud for customers. However, fraud is the #1 issue most burdensome to agents, not only in Kenya but throughout East Africa. This is followed closely by the threat of armed robbery. Providers have done little to protect agents against these risks, especially in providing safety against armed robbery.

5. Myth: M-PESA costs virtually nothing to send money to a friend.

M-PESA is certainly a low-cost option for sending money from one part of Kenya to another, especially compared with alternatives like sending money on a bus. However, M-PESA’s price structure for person-to-person transfers is non-linear, even though the costs to Safaricom are the same regardless of the amount sent (as long as cash-in or cash-out is not involved). More interesting still, Safaricom recently slashed P2P prices on low-value transfers, while raising them at the high end. This was likely a response to Equity’s planned launch of the FinServe MVNO, and may be based in part on evidence that consumers sending large value... than those sending low values. It also raises the question of how high Safaricom’s margins are, if they were able to reduce prices by as much as 67% overnight.

6. Myth: M-PESA agents are the most profitable in the world.

Microsave’s Agent Network Accelerator survey reports that the world’s largest mobile money agent network is well-managed and generates healthy transaction levels. Kenyan agents do a median of 46 transactions a day. However, they make just $70 profit per month which is less than Uganda’s $78 per month and significantly lower than Tanzania’s $95 per month. This is most likely due to the fact that until very recently, Kenyan agents were restricted to just transacting for Safaricom and not its competitors while in neighboring countries (especially Tanzania), agents can transact across multiple providers.

7. Myth: Poor people don’t use M-PESA.

It’s true that low-income and unbanked households were not early adopters of M-PESA. But, they caught on quickly. In 2008, fewer than 20% of the population living outside Nairobi on less than $1.25 per day used M-PESA. By 2011, this share had expanded to 72 percent. More recent data suggests that active mobile money users are no more likely to be literate or numerate than the national average, further indicating that the service is accessible and used by lower income households. Unfortunately, rural residents, those below the poverty line, and women are less l...such as Lipa Na M-PESA (merchant payments) compared with their counterparts who are urban, above the poverty line and male.

8. Myth: M-Shwari, the saving and loan product, is an M-PESA product.

M-Shwari is a savings and loan product that has proven enormously popular since its launch in November 2013. Commercial Bank of Africa (CBA), who offers the product via M-PESA, now has 897,000 loan accounts, more than any other bank in the country, and.... Each individual customer has a separate bank account within CBA that is subject to all the normal regulatory requirements of any other bank account. This means that these are customers of CBA, deposits are held by CBA and loans are in the books of CBA. M-PESA merely provides access to this simple account through its menu.

9. Myth: M-PESA is only being used to offer financial services.

An increasing number of organizations (at least 55 by CGAP’s latest count) are leveraging M-PESA’s infrastructure to make basic, essential services and utilities – in energy, health, education and water, for example – more accessible to people at the base of the economic pyramid (what we’re calling Digital Finance Plus). Angaza Solar and Grundfos Lifelink are two such examples. These services leverage M-PESA’s “rails” to make payments easier for customers and less expensive for providers.

10. Myth: Safaricom is so dominant that no competitor can threaten its quasi-monopoly status.

M-PESA has faced limited competition but that may be changing fast. The Kenya Communications Authority recently authorized a series of new MVNO licenses, including to Equity Bank (through its subsidiary Finserve Africa). Equity Bank will use SIM overlay technology to give it reliable access to the mobile channel through which it will serve customers – without relying on Safaricom. This could put Equity in a prime position to challenge Safaricom’s dominance. Safaricom is feeling the heat, vigorously challenging the proposed move and defending its turf. Perhaps partly in response to the recognition of changing times, Safaricom recently announced that it will allow its agents to work for other mobile mo..., a move that its competitors have been fighting for, for years.

All these new developments may bring headaches to the Kenyan regulators but are fascinating for those of us interested in the potential of digital financial services for financial inclusion, and carry significant potential benefits for consumers and market competition.


Submitted by Anastasia Mirzoyants on Thu, 2014-10-02 07:34
According to the Financial Inclusion Research program by InterMedia (linked in #7 bullet point in the post), even the users of more established mobile money products like M-Shwari, not just Lipan a M-Pesa, still exhibit all the characteristics of early adopters. The majority are urban, males, those living above the poverty line, mostly 15 and 34 years old. They are well educated and are likely to report professional or service jobs (teacher, doctor, salesperson, or policeman). They also have access to financial services: two thirds are banked. Overall, M-Shwari users appear financially comfortable but also young and advantageous; in combination, these two factors allow them experiment with M-Shwari without fearing potential financial risks. Currently, only about 1 in 5 users of M-Shwari are those below the poverty line. Yet, among M-Pesa users, 44 percent are below the poverty line. This means that while Kenyans living below the poverty line trust M-Pesa and recognize its importance for their financial lives, this is not the case for M-Shwari and other VAS. It seems that a good question would be, what type of assurance in terms of customer protection, would help boost confidence in VAS among M-Pesa users below the poverty line and encourage them to at least try the services? And following, what type of informational support this group will require to ensure they understand how to use VAS to their advantage?

Submitted by Rafe Mazer on Thu, 2014-10-02 10:28
Anastasia, Thank you for pushing a bit further on the VAS', which are only going to become more important on these types of delivery channels. I would wonder if part of the issue why lower income use M-Shwari less is that the loans are very small if you save only a small amount, and the savings side of this product is emphasized as much in consumers' minds as the borrowing side. I think the marketing of M-Pawa in Tanzania has moreso emphasized the savings element, so I wonder if there may be greater uptake by consumers who don't have enough money to save to borrow in significant amounts, or just want a secure savings vehicle more than they do a loan product. Or, another idea is it could be as simple as the less money you have, the less money you have available to save, hence lower use of M-Shwari to store value by lower-income populations even if it is attractive in theory. What we really need here is to know how much M-Shwari is displacing other savings or credit products used by these households. Rafe

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to charter- back in the late 1980s a group of us started asking how can the world's greatest visions (1) in terms of advancing the human lot be organised so that everyone passionate about a goal can network around it

we welcome all practitioners and youthful learners to the compass of

 what's the biggest purpose you want to see networked during life time?

ER ECONOMICS & CHARTER help design futures peoples want most- we mobilise and app entrepreneurial economics principle of action futures now to invest in longer-term prosperity that win-win-win models compound

major innovation tools linked in by charter profession include - jobscompetitions; open space ; grounded theory of opinion research; collaboration cafe; collaboration city searches - example-

also 12 grades of practising email- and such k-12 methods as new zealand has liberated since 1984 at - for evolution of digital structures since 1984 see Gordon Dryden paperfor journal of pro-youth economics and social business


please note that CHARTER like most methods that Entrepreneurial Revolution fans have spent 40 years working on since The Economist first announced ER challenges: while there is a minimal process of facilitating charters- its contextual. Try one out -q1 who in the world will uniquely miss what if we fail on the most valuable www project we know of: namely how do find 5000 youth of net generation whose collaborations can sustain growth through global villages faster than 5000 big bankers/politicos can collapse communities

- video on this challenge televised by new york's bronx tv as follow up to yunus launch talk of youth economics 2008

related yout economics projects: help find 100 leaders who value view that 2010s can be youth's most productive decade ; help innovate audits of all trillion dolar markets- eg health, edu, nutrition, media for the purpose eoples want most

charter is a collaboration leadership tool developed by Macrae Family from late 80s with 2 particular perspectives:

an entreprenurial competence of media people is to help communities question and answer what futures people want most in the most transparent and cross-cultural ways

in reserach for von neumann's biography- we valued his question - in a networking age what tools will people who want to have a good impact on maximum numbers of people use given that they will probaly be asked to help with 50 projects at a time each of whose computing anyaltics will be getting faster nd faster

while charering was intended to be a communications tool for maxiising involveent in progressing a huge goal , it turned out that the most central question oof all chartering is also the most central question for all goodwill audits including those that:

celebrate transparency

modl sustainable growth (as well as risk of collapse) as needing audits of exponential impact which are already spinning the future depending n relationship investments already made

wish to see if abundancy economics odleing eg how knowledge multiolies value in use can be much more valuable than 20th c scarcity econoics caused by consuming up things

like other tools that value open colaboration, anyone's quesstion can be valuable - note how a 9 year old asked the best question among over 1000 New yorkers at this january 2008 briefing

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