Kenya's MPESA to Spearhead Seamless Mobile Financial Transfers in the Continent

Michael Joseph, the immediate former CEO of Safaricom, has been tapped to spearhead the expansion of M-Pesa to other African countries as part of a plan to have a seamless mobile money transfer service on the continent.  M-Pesa is already successful in Kenya, and is now also available in Tanzania, Afghanistan, South Africa, while a pilot service is on in India.

But Vodafone is looking at spreading the services to other African countries such as DR Congo, Lesotho, and Mozambique with the aim of linking the market.  This will see mobile phone consumers send and receive money across borders in a move that will pile pressure on traditional money transfer service operators such as Western Union and Money Gram who have lost market share in the local market.

“M-Pesa is the most successful mobile money transfer service in the world and with Michael is a sure bet to drive its regional expansion having been behind its growth in Kenya,” said a senior executive at Safaricom who sought anonymity because he is not the firm’s spokesperson. “The rollout of the service in the new territories will not automatically enable registered Kenyan subscribers to send or receive money.

“But there is a plan to link them to these markets in coming years,” said the source. At present, Safaricom subscribers can receive money from the UK directly to their mobile phones in transactions carried out in partnership with Western Union and Vodafone. Mr Joseph retired from Safaricom in November after serving for 11 years and passed the leadership mantle to Bob Collymore.  He sits on the board of Safaricom and Johannesburg-based Vodacom, which is owned 65 per cent by the Vodafone Group — which has operations in five countries including South Africa, Tanzania, DR Congo, Lesotho and Mozambique.

It was under him that Safaricom rose to become East Africa’s largest and most successful firm in terms of earnings, and a market leader in Kenya’s mobile telephony market with a 76 per cent stake.  By 2005, Safaricom’s grip on the Kenyan mobile market had been cemented and in 2007 the company launched its mobile money transfer service M-Pesa — an innovation whose implementation was credited to Mr Joseph’s courage and which paid off handsomely winning over more than 13.5 million subscribers by September 2010.

Transactions worth Sh596.8 billion have gone through M-Pesa since its inception.  The service accounted for 11 per cent of Safaricom’s revenues or Sh5.2 billion in the six months to September this year up from Sh930 million in the same period in 2008.  Safaricom has used M-Pesa as a value added service, successfully using it to defend and attract subscribers from rival networks.

The service has driven a revolution of sorts in Kenya’s financial services where it is being used for payment of utility bills, dividend, goods at retail shops and banking services such as ATM withdrawals, deposits and cash transfers.  It is this market position that Vodafone seeks to replicate in five African countries served by Vodacom, especially DR Congo, Lesotho and Mozambique. Mr Joseph’s brief will be to shepherd the rollout of the product in the three countries and to shore up its performance in Tanzania and South Africa where the mobile money transfer service is yet to penetrate the market.

Low cost

The service was launched in South Africa in September and Tanzania in April 2008.  Nearly half (47 per cent) of all money transfers in Kenya now take place through the mobile phone, according to a survey by Financial Sector Deepening, a research firm that conducted the survey for the Central Bank of Kenya.

This has seen traditional money transfer service operators lose their grip on the market as more Kenyans turn to mobile phone-based platforms.  Popularity of the service is mainly hinged on the low cost of transaction, safety, and speed. Mr Joseph succeeded Mr Grieves-Cook who had served as the KTB chairman for two consecutive terms since his first appointment in November 2004.  Under his chairmanship, KTB managed to put up aggressive marketing campaigns targeting domestic and international tourists.

In addition, the organisation partnered with international travel and leisure groups as well as the media and airlines to build a strong image for Kenya as a niche tourist destination.

Nation Media

EAC Advised to Prioritize Regional Integration Over EPA

Members of the East African Legislative Assembly (EALA), have urged the East African Community (EAC) partner states to prioritise regional integration and development over the removal of trade barriers in relation with Europe.

This was disclosed in a positional paper presented by the committee on communications, trade and investments on the Economic Partnership Agreement (EPA) during the EALA meeting that was just concluded in Kampala-Uganda.

According to the recommendations, it is imperative for the EAC to prioritise regional integration and development ahead of EPA with the European Union (EU).  "This is critical for the EAC economies for industrial upgrading, export, diversification, food security, region-wide employment creation and ultimately for the countries' peace, stability and security," the paper reads in part.

According to Dr. James Ndahiro the Chairperson of the Committee at EALA, only when the Common Market has been firmly established and EAC countries have gained more strength, can they consider negotiating the EPAs with EU.

"We call upon the EAC bloc to make sure that they put much emphasis on all those areas that we feel are fundamental to our regional economic growth in its endeavour to industrialise," said Ndahiro, who represents Rwanda at the EALA.

"We have to create a conducive business environment; so we envisaged the situation whereby such negotiations are not taken seriously, would hamper our development efforts." He urged the partner states to negotiate a favourable deal which promotes growth of the regional development.

EPA is currently being negotiated between the European Union and the East Africa Community but the high level of liberalization demanded by EU has slowed the negotiations.

All Africa Frank Kanyesigye 30 December 2010

---------------------------------------------------------------------------------------

The East African Legislative Assembly (Assembly) is an organ of the East African Community; established under Article 9 of the Treaty for the Establishment of the East African Community. Under the Treaty, the Assembly has a Membership comprising nine members elected by each Partner State; ex-officio members consisting of the Minister or Assistant Minister responsible for the East African Community Affairs from each Partner State; the Secretary General and the Counsel to the Community. Currently, the Assembly has 45 elected Members; and 7 ex-officio Members totaling to a Membership of 52. Twenty of whom are female. 

The Assembly has a cardinal function in the furtherance of Community objectives; this function encompasses the legislative, representative and oversight mandate.

Solar Lighting Boom in Africa?

Nairobi — As many as 120 million households in Africa will be living off-grid by 2015, creating one of the world's largest markets for portable solar lighting in the next five years. This is according to a report, 'Solar Lighting for the Base of the Pyramid - Overview of an Emerging Market' which is published by Lighting Africa, a joint International Finance Corporation (IFC) and the World Bank initiative that is developing continent-wide programmes for solar lighting.

The report projects an up to 65 per cent growth rate in sales of portable solar lights, comparable to the recent explosion in mobile phone sales on the continent. Currently, only 0.5 per cent of some 140 million African people living without regular or reliable access to electricity have such lights.  The growth will be fueled by entrepreneurs using the latest technologies and designing products to suit consumers' tastes, the report says. But the market could grow even faster if distribution and financing were scaled up, it says.

Arthur Itotia, Lighting Africa programme manager, told SciDev.Net that the initiative does not just aim to light households but also to save people money and reduce the health risks associated with fuel lamps.  "By converting from kerosene to clean energy millions of consumers can improve their health, reduce their spending on expensive fuels and, ultimately, benefit from better illumination and more productive time in their homes, schools and businesses."  

The report also found that an average African household could spend US$225 less a year on kerosene by using solar lighting. Lighting Africa is helping to build the market for off-grid lighting across Sub-Saharan Africa by investing in consumer education, improving access to financing and looking at new ways to distribute the lighting.

Dana Rysankova, senior energy specialist in the Africa Energy Unit at the World Bank, said that Africa's high population growth and low levels of access to the grid mean that it will soon surpass Asia in the number of people without electricity.  The lessons learned from Africa, she said, are being used to give advice to other areas.  "For example, Lighting Africa advised another World Bank project in Haiti that was disseminating solar lanterns after the devastating earthquake there," said Rysankova.

But other experts warn that such noble ideas risk being overridden by market forces - especially if left solely in the hands of private sector players.  "Much as the idea is great and tenable, the implementers need to shape the market to allow poor households to buy the lights," said Simon Mugambi, an independent energy market consultant.

Dan Okoth All Africa 22nd December