Vodaphone’s 2007 brainchild M-Pesa (M – Mobile, Pesa – Swahili for money) had its 10th birthday last year, and what a 10 years it has been, with M-Pesa now operating in Kenya, Tanzania, Afghanistan, South Africa and India. In this article we will provide a short summary of the company’s history and operations and also highlight the incredibly positive effects M-Pesa´s increasing prevalence is having on its growing customer base.

What is M-Pesa and how does it work?

Founded in 2007 by Vodaphone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania, M-Pesa is a mobile phone based finance and microfinance service which allows its users to deposit money into an accounts stored on their mobile phones. The user can also send themselves PIN-secured text messages and redeem deposits for regular money. Essentially it’s revolutionised the way its users send and receive money and both M-Pesa and its customer base are reaping the benefits


Since 2007, the company has amassed around 30 million active users spread over 10 countries and processed around 6 billion transactions in 2016, peaking at a rate of 529 a second.

The company´s astounding growth rate has simultaneously produced social benefits, M-Pesa’s implementation has  brought around 200,000, equating to roughly 2% of the country’s population, out of extreme poverty according to research from Georgetown and MIT University. Users have also reported feeling safer, from not having to carry cash, with the only apparent disadvantage of M-Pesa´s implementation being that relatives see each other less due to not needing to physically hand over cash.


The collaboration of the Kenyan Commercial Bank (KCB) and M-Pesa has tranformed the way Kenyans can gain access to loans. With the majority of loan applicants in Kenya being deemed uncreditworthy due to a lack of credit history, access to finance was a struggle, but the creation of credit scores derived from mobile phone data (M-Pesa) has meant that 80% of applicants are now deemed eligibe for finance, with an average default rate of 2%. (The average loan size is approximately $40).


The Kenyan Government has recently issued bonds purchasable through M-Pesa in an attempt to finance much needed infastructure construction. Although the launch went worse than expected, with only 25% of the target being reached and only 5% off the people who signed up for the bonds actually purchasing, there are positives to be seen in fact that 85% off the people who bought the bonds had never bought one before. This is undoubtably a positive, as it is testament to the theory that Africa´s Fintech market is budding.

With 70% of Africa’s population under the age of 35, the continent is a prime location for Fintech growth. Young people are more open to technological advancements and the use of new applications, which is evident in the user demoraphic reports of some of the most successful Fintech start ups, like Monzo who claim that half of its users are under 30. In Africa, the sector is already heading in the right direcion, with Fintech investments estimated to have increased from $200m to $800m between 2014 and 2016, with the posibility that they could be valued at $3bn by 2020 becoming more and more likely. Although of course, success depends greatly on the ecosystem created by African governments; if the environment is conducive to innovation and technology, then the sky  certainly is the limit.