Description of “M-Pesa” The majority of the population in East Africa uses mobile payment services called “M-Pesa,” which recently celebrated its tenth anniversary. According to Monks (2017), the M in “Mpesa” stands for mobile while “Pesa” is a Swahili word, which means money. The mobile operator in Kenya, Safaricom, launched this product in 2007 for sending small amounts of money among users (Monks, 2017). However, in the contemporary international society, the number of users in over ten countries in the world is now 30 million (Monks, 2017). In 2016, it processed over 6 billion transactions at the rate of 529 transactions per second (Monks, 2017).

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In the East African country of Kenya, which it first launched, there are 18 million users, with 287,400 agents countrywide (Monks, 2017). One impact that the low-cost micro innovation has is uplifting at least 2% of the nation’s populace from extreme poverty (Monks, 2017). With continuous use, analysts state that it will have further positive impacts not only in Kenya, but also in the rest of East Africa, and the African region at large. Notably, the cell phone service exists in other countries outside the East African region. In partnerships with other service providers, it is present in the United States, Mozambique, Egypt, Democratic Republic of Congo (DRC), Romania, Albania, Ghana, Lesotho, India, and Tanzania.

Impacts of “M-Pesa” in Africa
“M-Pesa” is a relatively low-cost innovation that will continue to have positive effects on the African populace. Studies show that the mobile money service has positive economic outcomes and provides valuable insights that support economic development, not only in Kenya but across the African continent (Monks, 2017). With the increase of access to mobile money, other financial services are more accessible than before. The innovation led to a reduction of extreme poverty, particularly among female-headed households by over 2%, which translates to over 194,000 households (Monks, 2014). In addition to that, it also led to the lifting up of at least 185,000 women from subsistence to large-scale farming and businesses or sales occupations. The service is an electronic form of money transfer that enables users to conduct finical transactions through their cell phones. One significant impact is the banking of previously unbanked part of African populace. Since over 76% of the entire population in the continent has access to cell phone subscription, the money transfer service provides an affordable means of payment system (Monks, 2017).

It is the first mobile payment platform launched in Africa. Relatively, because it first came into use in the East African region, the section of the African populace that continues to get the positive impacts are from the geographic location. In fact, 96% of households in Kenya have an “M-Pesa” accounts (Monks, 2017). The effect of the service on poverty reduction is a result of an improvement in the financial behavior of the users. It facilitates safer and easier savings than the banking services. However, it improved the section of society with bank accounts. Besides that, it enabled the users to change their occupations. The mobile wallets that the service offers are a source of secure virtual funds. Passwords also protect cell phones and the mobile money facility.

The savings are beneficial for the users because they can have productive investments and establish business expansion. Notably, the service also offers affordable loans that have flexible repayment periods and low-interest rates. Through them, people have access to capital with which they can start small businesses. One vital difference that “M-Pesa” made in Africa is the reduction of transactional costs. In fact, when Vodafone launched it through Safaricom, the nearest bank in the country was up to 9.2 kilometers (5.7 miles) (Monks, 2017). In the ten years of its existence, it managed to reduce to an average of 1.4 kilometers (0.9 miles) (Monks, 2017). In conclusion, “M-Pesa” is one of the largest low-cost innovations that despite the benefits that it made among the poor in Africa, is likely to continue making others. The positive developments that it contributes are significant.

  • Monks, K. (2017, February 24). How M-Pesa changed banking in Africa – Retrieved from