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Like so many other Kenyans, Joseph Samuel used to send money to his family by mini-bus.It's a risky transaction: the sender pays three dollars to deliver a brown envelope full of cash on a packed 15-seater van to its destination far off in the countryside.
On Kenya's lawless roads, Matatus, as they are called, often get carjacked. Their reckless drivers are prone to road crashes and, like many Kenyan motorists, are often stopped by police looking for a little baksheesh.
The money sometimes never arrives, Samuel said, or some is missing from the stash.
But that's all changed now. A new service by Kenya's largest mobile service provider allows Kenyans - many of whom often don't have a bank account or access to a bank - to send money using their cellphones.
"This way I know it is safe and it goes directly to my wife. She will call me later to inform me she has received it," said Samuel, a police constable. He sends his wife and three children 4 000 shillings every month through the service known as M-Pesa.
M-Pesa, which is said to be the first of its kind worldwide, was launched in March and now has 700 000 subscribers from all walks of life - CEOs to farmers.
While East Africa's largest economy has a growing middle class, more than half of the population lives on less than one dollar a day. And for now, Safaricom M-Pesa outlets reach more people than banks do.
Over 1 000 dealers from the country's Muslim coast to the far, arid reaches of the northern border with Somalia and Ethiopia can conduct a transaction of up to $525 (about R3 300).
"In Kenya there are a number of people with no access to formal means of financial services, especially in some more rural areas where there is no access to a bank or ATM machine," said Pauline Vaughan, head of M-Pesa with Safaricom, the mobile provider.
"This gives them an alternative. It just opens the opportunity for them to send money transactions."
And all you need is a cellphone SIM card.
The service is different from mobile banking in the developed world, where bank clients can perform transactions on their accounts from their cellphones.
With M-Pesa, subscribers pay an agent the amount of money they would like to send, the receiver is notified of the transfer, and can then pick up the money from an agent in his area, for a small withdrawal fee.
Carol Mwikali, a 23-tear-old pharmacist, sends her parents 1 000 (about R100) shillings every month using M-Pesa.
They live in Mwingi, about 200 kilometres east of the capital Nairobi, and without her own bank account, Mwikali is able to send home the cash with no fuss and no hidden charges.
"It's very convenient," she said.
That's the bonus Safaricom has pushed with the new initiative, but some clients said they have faced glitches with the service.
Victor Riitho visited an M-Pesa outlet across the street from Kibera, Africa's largest slum, and was in a huff over the registration process.
Older SIM cards don't have the M-Pesa menu, so subscribers need to get a new one, at no cost, which needs to be activated - and this can take up to one hour.
"I came here thinking I could send my daughter money immediately and now they are telling me I have to wait? This was not the plan," said grey-haired Riitho, who finally conceded to hold out the hour, saying his daughter was worth it.
Meanwhile, across the road at the Bon Voyage M-Pesa outlet, a tiny shop on a narrow path on the outskirts of Kibera, one man pleaded with the sales agent to retrieve his M-Pesa PIN number, necessary digits to access one's money.
"This happens sometimes," said Weldon Milgo, the agent, who turned the man away.
But other than hurried or forgetful customers, Vaughan said the risks to using M-Pesa are minimal.
"As long as you keep your PIN safe and secret, even if someone steals your phone they won't be able to access the money in the M-Pesa account."
Vaughan said the next step for M-Pesa is to allow subscribers to pay bills using the service and to have lower-income employees like Nairobi's ubiquitous security guards receive their salaries - which are usually no higher than $150 - by phone.
A service similar to M-Pesa was set to be piloted in neighbouring Tanzania and in Afghanistan, testament to the need for such a plan for developing countries, Vaughan said.
SOURCE: IOL, November 6, 2007