Kenya’s Fintech Revolution

If someone asked you to point to a country on the world map with a hugely financially inclusive population, you probably wouldn’t choose Kenya. Noted Economist Dr. Kaiser Bengali notes that Kenya has been able to include over 90% of its population in the legal financial system by the application of fintech.

Kenya is significantly more banked than its neighbours. Approximately three-fourths of the population has access to a bank account, but with the rise of fintech, and specifically a service called M-Pesa, 93% of the population can make cashless transactions and take advantage of myriad commercial services available in the country. The service was developed by Safaricoms, the country’s leading mobile network operator. The company is partially owned by Vodafone. 60% of those registered for a monthly M-Pesa service, making up for 70% of the total financial transactions carried out in the country.

All this has been made possible due to the high rate of mobile usage in the country. According to the Communications Authority of Kenya, there are 38.5 million mobile accounts in the country. In perspective, the total population of the country is 48.46 million.

The success of the service has forced Visa to introduce its own competitor, mVisa. The service is a cheaper alternative to M-Pesa and may be incredibly successful to the population that is either too poor to opt for M-Pesa or just unaware of fintech in general.

Nigeria, a competing African country, has a much larger economy ($405.1 Billion) compared to Kenya’s ($70.5 Billion), yet only 44% of its population is banked and an abysmal 4.6% of its population use a mobile device to make payments.

The State Bank of Pakistan endeavours to increase the percentage of adult population ingrained in the legal financial system to 50% by 2020, and is relying on fintech to bridge the gap. At the moment, 45 million people are connected to the internet via 3G/4G in Pakistan, but the total population is 207.7 million according to the latest census. It could learn from the success of the system in Kenya, a much poorer country, which has managed to do a lot more with a lot less.

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