Author: Ignacio Mas, Senior Fellow, Center for Emerging Markets Enterprises at the Fletcher School, Tufts University
With M-PESA and the whirl of innovations that it has triggered, there is no doubt that Kenyan payments are becoming more electronic. But, at the same time, are they any less paper-based? It’s hard to argue that is the case, if one looks at the Central Bank’s data. (Currency and GDP are from its statistical bulletins, and check volumes are from its Annual Reports; and remember that M-PESA was launched in April 2007).
The value of currency in circulation has remained essentially flat, especially if you discount the 2007 high blip (I doubt that M-PESA’s cash-busting bang was largest during its first nine months of operation). Likewise, the volume of checks is on an exceedingly gentle decline. The average check value has dropped quite significantly, but surely that’s due to competition from electronic funds transfers at the high value end rather than from M-PESA with its small-ticket transactions.
To me this lack of visible impact on paper highlights the two key pending transitions that M-PESA –and mobile money more generally—needs to undergo.
First, customers need to see value in storing their balances electronically. As long as most customers have the practice of withdrawing any electronic money they receive immediately and in full, M-PESA will remain essentially a cash-to-cash service, and as such it sustains rather than reduces the role of cash in the economy. (My recent mantras: M-PESA is better cash, not better than cash and you can’t go cash-lite on empty accounts.)
Second, businesses need to see mobile money as an easier way not only of paying and getting paid, but also of managing the information around those payments. It needs to link with order management, invoicing, accounting, reconciliations; possibly even inventory and fleet management. Mobile money needs to have the kind of flexible application programming interfaces that allows corporates to handle transaction flows seamlessly within their own systems rather than as a separate universe of transactions. It must solve basic trust issues that arise when there is no prior relationship between buyer and seller. (My recent mantras: solve business paint points around mobile payments and think of cash as a highly-evolved visual-acceptance payment instrument.)
Without these two transitions, to more electronic storage of value and flexible interfaces into business IT systems, mobile money will continue to be an extremely useful extension of the Kenyan payments system, but it will hardly be at the core of it. The core remains very paper-centric.
Ignacio Mas is currently a Senior Fellow at the Fletcher School’s Center for Emerging Market Enterprises at Tufts University, a Senior Research Fellow at the Saïd Business School at the University of Oxford, an Associate with Bankable Frontier Associates, and an independent consultant. You can find further details of his work at: http://www.ignaciomas.com.
Yes, this blog was in a bit of a hiatus. While I put together some more original stuff (and hopefully welcome additional contributors), let me share two maps with you that are pretty cool not just because they are quality products in their own right, but also because of how they were put together.
Source for everything in this post: 5 Maps That Could Help Solve Some of the World’s Most Daunting Problems
My favorite of the five shows the outreach of financial services in Nigeria:
… the Gates Foundation’s Financial Services for the Poor program launched an ambitious geospatial project in Nigeria. Armed with BlackBerrys and traveling in a grid pattern, 30 surveyors undertook a three-month campaign in Nigeria to pinpoint all of the services available—from bank branches to microfinance institutions to post offices and more. They logged GPS coordinates and took photos. … The resulting website gives the best picture yet of how financial services work in a developing economy. Jake Kendall, the Gates Foundation program officer who heads the project, hopes financial institutions will use the map to figure out where to open new locations. It can also guide public policy: Kendall’s team used this map to show the Nigerian central bank governor the need for mobile-based financial services, since it demonstrates that more than half of residents live outside a 3-mile radius of brick-and-mortar options.
A good map inspires curiosity. I find myself asking, how do you get to people who do not have mobile coverage? (Those are the non-purple parts.) Mobile money agents are often touted as a great list mile solution – yet, they often overlap with existing infrastructure, and in a fair few cases, are missing where other delivery channels, such as post offices, are present. Are mobile money agents really that redundant? Are there alternative delivery channels for financial services one should explore?
The second map is of the biggest slum in Kenya, Kiberia (the Wired piece lets you zoom into the map):
African maps are notoriously problematic. Much of the data is old; roads, particularly footpaths, languish unnamed. Africans often navigate by informal landmarks like bars or gas stations, places not represented on standard maps. The slums have it even worse: On Google Maps they figure as blank expanses, in keeping with their reputation as shadowy, marginal places.
Enter Spatial Collective and Map Kibera. These two organizations, a company and a nonprofit, are mapping a Kenyan mega-slum called Kibera—the name is derived from a word meaning “jungle”—according to how its 200,000 inhabitants actually navigate it. The maps started with crowdsourced landmarks important to locals: water taps, schools, pharmacies. Residents with Internet access were invited to add to an open source map; others contributed data by SMS or attended community workshops, where they wrote on giant empty maps.
Spatial Collective overlays these community-generated maps with official data. One project tacked on sewer-line data (depicted here) from Nairobi City Water to find the most valuable spots to build new public toilets. Another mapped community-reported crime data to help the World Bank understand where to place safety interventions like lamps. These kinds of projects make Kibera more legible to its inhabitants and to outsiders.
In addition to the ability to provide efficient placement of new services, the fact that this map was crowdsourced is particularly noteworthy. By collecting information deemed useful to the residents of the slums themselves, whatever work done based on this will presumably be more relevant to them. Incidentally, comments in the article suggest that this is built on OpenStreetMaps’ work in mapping Kibria (http://mapkibera.org/) – that in itself is worth checking out.