Cheptum Toroitich 

LLB Student, Strathmore University Law School, Nairobi, Kenya

The Mobile Money Revolution

The revolution of mobile money in Kenya since its inception in 2007 has been overwhelming. Mobile phone money transfer operators are authorized under the National Payment System Act 2011 and National Payment System Regulations 2014. The first mobile money system was MPesa, which stands for M (Mobile) and Pesa (money in Kiswahili), a product of Safaricom, which is a local mobile operator whose biggest shareholder is Vodafone.

MPesa grew in amazing leaps and bounds to become the biggest mobile money transfer system in the world, a true innovation. This success story changed mobile money transfer platforms for ever and since then mobile money transfer applications have mushroomed all over the world. Mobile money systems also moved from the traditional person to person money transfer to the provision of banking services to both the banked and the unbanked. MPesa transformed the ordinary citizen (a kiosk, a gas attendant, a street vendor) into mobile cash tellers, thus making money transactions and banking business incredible cheap and accessible.

Soon after, commercial banks partnered with mobile network operators to deepen and expand the provision of novel services, which enabled mobile phone users to access bank accounts and banking services such as credit facilities through their mobile phones.[1] Mobile money systems, particularly the digital credit systems, have pushed the Kenyan economy forward by providing small traders who previously represented the unbanked with easy and affordable access to financial services.

According to Dr. Joy Malala, “The infrastructure in which mobile payments is used, the ubiquity and convenience coupled with the growing willingness of consumers to use it (mobile payments), made its implementation a tangible reality in Kenya. Mobile payments have afforded the scale and efficiencies and the flexibility and contextual appropriateness of informal markets that other similar services were unable to meet.”[2]

Digital credit in Kenya

Lack of access to credit services by enterprises is one of the key factors that hinder the growth of small and medium enterprises in developing countries.[3] For instance, Safaricom partnered with CBA (Commercial Bank of Africa) to form M-Shwari, a banking account which is linked to one’s sim-card. The product offers a combination of savings and loans to the customer. Shwari, which means “calm” in Kiswahili, has taken the Kenyan market by storm. M-Shwari has piqued the interest of mobile money watchers looking for the next innovation to drive financial inclusion globally.[4]

This digital credit service represents an unprecedented new channel of access to short-term loans and secure savings for a swathe of the population who has not had previous access to formal financial services.

According to the Central Bank of Kenya Governor Dr Patrick Njoroge, a female merchant in Nairobi (Mama Mboga) will most likely borrow the money from her mobile phone. She will borrow up to 5,000 shillings which will be enough capital to buy fruits and vegetables from the market that day. This will most likely be between 3am and 5am when, according to the Governor, a third of all mobile loans are taken up and this is why MPesa’s busiest network time occurs at such early hours of the morning. By evening, she will have repaid this loan, after making the necessary profit to be able to put food on her family’s table.[5]

The anecdote highlighted above shows how mobile money is moving the Kenyan economy. It shows how access to credit facilities help to foster financial inclusion. Broadly defined, financial inclusion refers to access to and usage of appropriate, affordable, and accessible financial services.[6]

The future is here

Mobile money systems are arguably still in their nascent stages. Access to micro loans within seconds is a major step towards financial inclusion. More studies and research ought to be made to understand the real social and economic effects mobile money, and particularly digital credit, has on low income Africans. It is amazing the impact such a mobile application has made and will continue making in shaping and transforming the Kenyan economy as a whole.



[1] Central Bank, ‘National Payments System’ https://www.centralbank.go.ke/national-payments-system/ on 13 May 2019.

[2] Malala J, ‘Consumer Protection for Mobile Payments In Kenya: An Examination Of The Fragmented Legislation and The Complexities It Presents For Mobile Payments’ Kenya Bankers association https://www.kba.co.ke/downloads/Working%20Paper%20WPS-07-13.pdf on 13 May 2019.

[3] Beck T, ‘How Mobile Money is driving economic growth’ https://www.weforum.org/agenda/2015/09/how-mobile-money-is-driving-economic-growth/ on 13 May 2019.

[4] Cook T ‘How M-Shwari Works: The Story So Far’ FSD Kenya https://fsdkenya.org/publication/how-m-shwari-works-the-story-so-far/ on 13 May 2019.

[5] Omondi D, ‘A glimpse into Kenya's billion shillings wee hour-business oiling the economy’ Standard Media, 21 March 2017 https://www.standardmedia.co.ke/business/article/2001233461/a-glimpse-into-kenya-s-billion-shillings-wee-hour-business-oiling-the-economy on 13 May 2019.

[6] IFC, ‘The role of data in supporting financial inclusion policy’ IFC Bulletin No 47 May 2018 https://www.bis.org/ifc/publ/ifcb47.pdf on 13 May 2019.


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