Four Reasons M-Pesa Succeeded in Kenya

M-Pesa agent and customers

M-Pesa is rightfully held up as an incredible success in the world of mobile money.  Its uptake (13M and counting), usage (15M + transactions per month), and value of money transferred is really remarkable – and even more so given it has only been around for a bit over 3 years.  It has vastly improved the process of P2P money transfer: before M-Pesa, Kenyans would send money via bus driver or other informal means which was costly, slow and insecure; with M-Pesa, Kenyans can send money electronically for a smaller fee and it arrives instantly with great reliability.

However, despite massive growth in Kenya over a short period, M-Pesa has not found success in other countries despite several attempts by Vodafone.  There are efforts currently underway in Tanzania, South Africa and Afghanistan – all with nothing close to the results seen in Kenya.

So why is that?

Having spent a lot of time talking about this with my coworkers as well as visiting academics and researchers, I think these are 4 of the main reasons:

  1. MNO Monopoly: This one is probably the biggest by far.  Safaricom has somewhere between 75 – 85% of the mobile market in Kenya.  That enabled Safaricom to do many important things, including:
    • Create a huge closed-loop of mobile transfers, wherein the Safaricom-customer to Safaricom-customer transfers covered such a large proportion of existing subscribers that it could generate huge volume without having to be interoperable.
    • Roll out a huge network of M-Pesa agents.  We’ve heard customers say that “M-Pesa is like your shadow” – there’s always an M-Pesa agent nearby.  Having agents in every village meant that people were comforted by the easy accessibility of their M-Pesa money.  Now Safaricom has over 23,000 agents – a number so astounding that it’s not at all surprising to see 3 of them on the same side of the street next to each other and another few across the street.  They are the Starbucks of cash-in and cash-out.
  2. Regulatory Free Pass: The Central Bank of Kenya supervised but did not regulate M-Pesa until very recently (February to be exact).  That’s 3+ years of unregulated growth.
  3. Existing Money Flows: Domestic remittances represent a huge flow of money in Kenya.  In other places (like Mexico and much of Latin America or India) it’s international remittances which are much more difficult given multi-party and cross-border challenges.  Not so in Kenya – domestic remittances, largely sent from Nairobi “up-country” or to areas outside of Nairobi, are big business.  These domestic flows created a perfect usage scenario for a nation-wide closed loop like M-Pesa.
  4. High SIM Penetration: Not as unique to Kenya as the previous 3, but still important, is the high penetration of SIMs.  I specify SIMs because in order to receive M-Pesa money in, say, a rural area, one doesn’t even need to own a phone – a SIM that can be obtained for free and popped into a neighbor’s phone does the trick.  (Note: it’s also possible to receive money without having a registered SIM but that’s more costly for the sender.)

There are probably others as well – what are your thoughts?



Filed under M-Pesa

3 responses to “Four Reasons M-Pesa Succeeded in Kenya

  1. ludicastri

    Interesting. And somehow it could be possible to go beyond 1 and 2… the government owns a big stake in Safaricom, and the lack of regulation has allowed the Central Bank to exercize some arbitration in authorizing other providers (e.g. Zain) to issue their products. The delayed competition has reinforced Safaricom’s dominant position…

  2. vivan mehra

    Hi Pritam,

    my name is vivan mehra & I work for Business Today magazine in India.Our magazine is doing a small story on MPesa for which I want to use your picture in a small size. Hope thats OK
    Thanking you ,


  3. Tim Sablik


    I am a writer for Region Focus, a free economics magazine published by the Richmond Federal Reserve. I am working on a story about mobile payments, and I was interested in acquiring permission to use your photo with the story. I would be happy to discuss details via email. You can reach me at Thank you for your help!

    Tim Sablik

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