How M-Pesa flourished in Kenya's unique landscape

The M-Pesa success story in Kenya showcases the significance of adopting a holistic view of how society works (within their environment, context and culture) when designing a new business proposition for a market.

Safaricom, Kenya’s major mobile network provider, introduced M-Pesa, in 2007. In just the 1st month, >20K customers registered for the mobile money service, and now >96% of Kenyan households use it.

Photos (taken on one of my trips to Kenya): M-Pesa shops, kiosks and agents can be found everywhere in Kenya

There were a variety of factors contributing to the success of M-Pesa in Kenya but mainly because it works within Kenyan’s environment, context and culture. For example:

🏦 In 2007, >70% of Kenyan households were unbanked due to poverty and limited access to banks and ATMs. M-Pesa filled this gap by enabling users to make and receive payments without needing traditional banking infrastructures.

📞 Kenya had a high penetration mobile device penetration, with Safaricom holding an astonishing 84% market share in 2007. The dominance, coupled with a strong national presence, allowed M-Pesa to scale rapidly.

🤗 Kenya is a collectivst society, hence social support is important. Without a bank account, urban Kenyans had difficulties in transferring money to support family, relatives or family in rural areas. This issue is significant in Kenya due to the strong rural/urban divide. M-Pesa addressed the challenge by allowing them to deposit, withdraw, transfer and receive money with just a good old 9-key Nokia with a one-bar service.

💰 M-Pesa’s cashless payment system was also a revolution in the fight against corruption (e.g. petty bribes) and it decreased the chances of Kenyans being robbed.

🔏 Kenya‘s government created an enabling regulatory environment, exempting innovative payment products offered by non-bank companies like Safaricom from burdensome regulations. It also permitted Safaricom to license 'agents' to perform basic banking services for their customers with only limited requirements to enter the business.

The success of M-Pesa in Kenya was not by luck or coincidence. It was tailored to meet the specific needs of the Kenyan population. It solves their problems. It took into account their environment, infrastructure and challenges. It fits into their ecosystem.

Replicating the exact solution in other markets without considering these factors may not yield the same results.

💥💥💥 This is why it's vital for businesses to prioritise understanding the nuances of each market (e.g. context, background, beliefs, customs, history, infrastructure). These aspects define a society’s attitudes, needs and challenges. By doing so, you can design solutions that truly resonate with your target audience and maximise the chances of success.

Note: ‘M’ = Mobile, ‘Pesa’ = Money in Swahili