Alice Makochieng- Speaker & Lecturer Africa Week-NMMU 2nd Avenue Campus

Key words- Innovation, Africa, mobile money, fintech, investments

A. Makochieng Africa Week 24th May 2017- NMMU 1 GREEN AND SUNNY

A. Makochieng Africa Week 24th May 2017- NMMU 2 A. Makochieng Africa Week 24th May 2017- NMMU 3 A. Makochieng Africa Week 24th May 2017- NMMU 4 A. Makochieng Africa Week 24th May 2017- NMMU 5  Mpesa’s History

 Mpesa’s financial figures

 Mpesa’s impact and innovation

 Future developments

A. Makochieng Africa Week 24th May 2017- NMMU 6 A. Makochieng Africa Week 24th May 2017- NMMU 7  For years, the emerging markets…Africa in particular has looked to the West for innovation and ideas to manage their financial systems.

 Except in this one area where globally, the world is looking to Africa for ideas…in the mobile money transfer technology

 80 % of the worlds mobile money transactions occur in East Africa, with as the leading country globally in this. The Economist 2017-

A. Makochieng Africa Week 24th May 2017- NMMU 8  The big banks reaped higher returns, charging expensively for poor services and looked relatively successful- but with very unhappy customers

 These mainstream banks were monopolistic, considered themselves too big to fail, and not innovative to serve a large unbanked market.

 African economies, long underserved by the mainstream banks, have leapfrogged into fintech- banking meets technology

A. Makochieng Africa Week 24th May 2017- NMMU 9 Safaricom started Mpesa in 2007. The idea was- ‘what if we allowed people to transfer money using their mobile phones’…

The Government of Kenya, Safaricom and the DFID (UK) put in the initial investment for a trial mobile money transfer technology

Two British scientists and the Kenyan team (Including the University of Nairobi) started working on this silly idea… NB- Universities, Govt & Industry collaboration A. Makochieng Africa Week 24th May 2017- NMMU 10  Even the name- Mpesa –it sounded so African that one of the team members said it will not take off-

 But, Safaricom stuck to their gun that that is the name….Mpesa- ‘money’ in Swahili

 With a ready market of many unbanked adults- it quickly took off;

A. Makochieng Africa Week 24th May leaprofrogged into fintech2017- NMMU 11 Mpesa has grown quickly and is a cash cow for Safaricom > $30 million per day. 40% of Kenya GDP passed through Mpesa.

Mpesa has 29 million subscribers, and is available in 10 countries across Africa, Asia and Europe

Mpesa revenues for Safaricom was Ksh 55 billion ($ 567 million) for the year ending March 2017. In total, Safaricom made Ksh. 200 billion (1.9billion USD) >> R25 billion; 32% rise in A. Makochieng Africa Week 24th May Mpesa revenues 2017- NMMU 12  Mpesa’s market share of mobile payments 69%, no other mobile payment has these impact (even Square by Twitter CEO J.D)

 Africa has 1.1 billion population, 70% of which is unbanked, with 557m mobile subscribers (GSM Association)

 330 million Africans accessing the with mobile payments as the big opportunity, and still growing

A. Makochieng Africa Week 24th May 2017- NMMU 13 Africa is very much in need of user-centered innovation…

Focus innovation on a problem that is bugging a lot of people. Mpesa focused on serving masses of unbanked population. Has 150 000 agents

Mpesa has been able to lift many people in Kenya out of poverty by stimulating rural economies especially in agriculture, retail, energy and transportation… 2% of households

A. Makochieng Africa Week 24th May 2017- NMMU 14 MAY 2017

A. Makochieng Africa Week 24th May 2017- NMMU 15 A. Makochieng Africa Week 24th May 2017- NMMU 16 A. Makochieng Africa Week 24th May 2017- NMMU 17 A. Makochieng Africa Week 24th May 2017- NMMU 18 A. Makochieng Africa Week 24th May 2017- NMMU 19 1. Develop an incredible product

2. Mpesa meets these 3 innovation questions: Can you Deliver- Connect-Scale?

3. Mpesa connects with many service providers from airlines, banks, the stock exchange, pay TV to credit providers

4. Have an agile business model… MPESA keeps improving and scaling up

A. Makochieng Africa Week 24th May 2017- NMMU 20 5. Solve a deep problem- a real need for people (many people)

6. As you show traction- build a community – along the financial value chain - of customers, suppliers, investors- gain scale

7. MPESA is linked to banks and many service providers hence seamless movement of money

A. Makochieng Africa Week 24th May 2017- NMMU 21  Africa will build the future… Mark Zukerberg

 "This is where the future is going to be built," Zuckerberg

 He said this in his first stop in Kenya in May 2016 ... on Kenya's most famous innovation, the M-Pesa mobile money transfer service

A. Makochieng Africa Week 24th May 2017- NMMU 22 A. Makochieng Africa Week 24th May 2017- NMMU 23 A. Makochieng Africa Week 24th May 2017- NMMU 24 A. Makochieng Africa Week 24th May 2017- NMMU 25 A. Makochieng Africa Week 24th May 2017- NMMU 26  Factor conditions- Kenya’s economic base is service-oriented ‘intangibles’ as opposed to dominance by commodities- hence the country has real capabilities in an educated workforce with skills and research capabilities

 Demand conditions from customers- Kenyan’s have an experimental mentality and are risk takers, ready to try new technologies. The first CEO of Safaricom Michael Joseph called them peculiar Kenyans:-)

A. Makochieng Africa Week 24th May 2017- NMMU 27 CURIOUS!

A. Makochieng Africa Week 24th May 2017- NMMU 28  Firm strategy- Safaricom’s strategy, operational excellence has driven Mpesa- they focused on it. The presence of other mobile rivals spurred competition thus driving Mpesa’s service delivery and growth

 Government investment- The best investment that the Government of Kenya has ever made

 Chance- Mpesa innovation was triggered by random events and the right timing

A. Makochieng Africa Week 24th May 2017- NMMU 29  Safaricom- deal…  Safaricom is set to expand its M-Pesa financial services across Africa.

 South Africa's Vodacom has just bought a 35% stake in the Kenyan telecoms operator from Britain's .

 This deal is important for Vodacom and it paid Ksh 266.6 billion (2.4 Billion UK

Pounds)… A. Makochieng Africa Week 24th May 2017- NMMU 30 A. Makochieng Africa Week 24th May 2017- NMMU 31 A. Makochieng Africa Week 24th May 2017- NMMU 32 MPESA CAN SOLVE SASSA PAYMENTS, RSA

A. Makochieng Africa Week 24th May 2017- NMMU 33  More innovation & linkages via Mpesa.  Users in Kenya can buy Government bonds in the NSE, a first in the world… besides other services

 Mpesa launched a card payment system- in May 2017, directly competing with Visa and Mastercard

 With mobile technology, 4th industrial

revolution will be Africa’s,A. Makochieng Africa Week via24th May fintech 2017- NMMU 34 A. Makochieng Africa Week 24th May 2017- NMMU 35  More inter-connectedness across the continent; and across industry boundaries

 Investment by government in the infrastructure to bring down the cost of data-

 Changing education system to include more coding and tech hubs. The iHub, Silicon Cape

 Hybrid education- of Engineering and Management degrees

A. Makochieng Africa Week 24th May 2017- NMMU 36  “This continent needs to be a future hub of global growth, not just African growth”- President Obama, 2015

 When Obama praised Kenya’s tech entrepreneurs during his trip there in July 2015 during the Global Entrepreneurship Summit (#GES2015)

 Can Africa lead the future in innovation?

A. Makochieng Africa Week 24th May 2017- NMMU 37 A. Makochieng Africa Week 24th May 2017- NMMU 38 Thank you all!

A. Makochieng Africa Week 24th May 2017- NMMU 39