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Kenya: Mobile payments go viral


The African Success story is a World Bank research study anchored in the Africa Region Chief Economist’s Office Unit. The project intends to document recent African success stories across a broad range of topics with a view to: (1) broaden dissemination and knowledge within the region of the remarkable transformation that is taking place in many African countries; (2) examine what has worked and why, including re-evaluating some widely accepted past successes, so as to deepen our understanding of the drivers of success in the region; and (3) draw practical lessons with a view to informing policies and interventions.

Its main goal is to promote regional learning and disseminate lessons learned with particular attention to transferability and adaptation. Read More

The project is anchored by the Africa Region’s Chief Economist’s Office and led by Punam Chuhan-Pole (Lead Economist, Task Team Leader). Africa Region staff provides inputs at various stages of the project, including in selecting case studies, developing case studies, and providing guidance to case study authors. The work is carried out under the guidance of Shanta Devarajan, Chief Economist of the Africa Region with contributions from other institutes such as the AfDB, AERC and the IMF.

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M-PESA's 9million registered users transfer on average $320million per month Download Full Story (PDF) 


Inadequate, inaccessible financial services is undoubtedly one of the reasons why the poor are trapped in poverty. Without access to finance, the poor people cannot invest in tools to increase productivity, start a microenterprise, invest in education or health, or even take time to search for better opportunities. In addition, monetary exchanges require a physical location and people need transportation to get to the location, both of which can be problematic in infrastructure-constrained countries such as Kenya, particularly in rural areas.


Developed by Vodafone and launched commercially by the company’s Kenyan affiliate Safaricom, M-PESA is a small-value (all transactions are capped at $500) electronic payment and store of value system accessible from ordinary mobile phones. Once customers have an M-PESA account, they can use their phones to transfer funds to both M-PESA users and non-users, pay bills, and purchase mobile airtime credit for a small, flat, per-transaction fee. The affordability of the service has been key in opening the door to formal financial services for Kenya’s poor.


Since its introduction in mid-2007, M-PESA had been adopted by 9 million customers as of late 2009—40 percent of Kenya’s adult population—and is now facilitating an average of $320 million per month in person-to-person transfers (roughly 10 percent of Kenya’s GDP on an annualized basis). Extremely rapid uptake of M-PESA is a strong vote of confidence by local users in a new technology as well as an indication of significant latent demand for remittance services. In recent months, M-PESA has begun allowing institutional payments, enabling companies to pay salaries and collect bill payments.


Three major lessons have emerged from M-PESA. First, it demonstrates the value of leveraging mobile technology to extend financial services to large segments of unbanked poor people. Second, it shows the importance of designing usage-based rather than float-based revenue models for reaching poor customers with financial services. Unlike a traditional bank, which typically distinguishes between profitable and unprofitable customers based on the likely size of their account balances and ability to absorb credit, M-PESA serves any Safaricom mobile customer who pays for an account. And third, M-PESA reveals the need for a low-cost transactional platform that enables low-income customers to meet a range of payment needs.

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