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23 July 2015

Why Obama will need m-pesa for his visit to Kenya

Tomorrow, President Obama will come home to Kenya. He is likely to get calls from relatives asking for him to ‘chip in’. He will be expecting them. These types of calls are not uncommon in Kenya.

Only the other day, I got a text message while I was a work: “Uncle Matata is very sick and is seeing a doctor. The money we had budgeted is not enough. Can you help?” In Kenya, social obligations dictate that you ‘chip in’.

For me, it was just an ordinary day in the office and so I had left my debit card at home. My car had enough fuel to last three days so I took just a little cash for lunch. When I got the message, I checked my M-Pesa e-wallet and found it had half of the amount being asked for. So I sent a text back asking them to hold on as I waited for my meeting to end. After the meeting I stepped out and asked a colleague if he had some money in his M-Pesa e-wallet which I could borrow and refund that evening. I was able to send the money via M-Pesa.

According to the Central Bank of Kenya there are about 124,000 mobile money agents, serving 25 million customers, who made over 900 million transactions worth over KES 2.4 trillion (around USD $24 billion). This compared to about 12 million debit cards with 18 million transactions worth only KES 108 billion (approx. USD $1.1 billion) during the same period.

A growing number of banks and other financial institutions are looking to leverage the existing digital financial service infrastructure. But many are struggling to understand the key elements of these: from strategy to product delivery as well as how to drive uptake and usage, while managing risk and fraud. They need help.

FSD Africa recognises the important role that mobile money plays in facilitating payments. We have provided financial support to MicroSave Helix Institute for Digital Finance to research, design and train digital finance professionals across Sub-Saharan Africa.

When Obama visits Kenya he is likely to get calls from relatives. Some of those might be appeals for him to play his part in building social capital of Kogelo (the village where he comes from). Others might be from African leaders urging him to cement his legacy before he leaves office. For that, he may use a USAID grant from the State Department or a communique at the end of a global summit. But for family and friends in need of a just few shillings to tide them over, he will need his M-Pesa mobile money account. Because even he is expected to chip in.