International
SMART Aid helps mobile phones bring banking to Kenya’s rural poor
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In Kenya, as with many places in Africa, opening a bank account requires a minimum deposit which is often beyond the reach of poor families. In rural areas, banks can be far away and inconvenient to reach. M-PESA is a money transfer system which allows people to deposit, withdraw, and transfer money by mobile phone without a bank account. The model was piloted by Vodafone with assistance from the UK Department for International Development (DFID). It was implemented in early 2007 by Safaricom, Kenya’s largest mobile phone provider. It now has approximately five million users. A worker in Nairobi can open an account at any M-PESA agent, in a local shop, a Safaricom dealer, or a petrol station. He/she can deposit earnings into an M-PESA account and transfer money to family members via SMS. The recipients go to a local store in their village and cash the SMS using a secret code contained in the message, and their identification card. Considering that mobile phone subscriptions in sub-Saharan Africa grew by more than 60 per cent annually between 1994 and 2005, and are still rising rapidly, the M-PESA model could be the money transfer mechanism of the future.
-Beth Adler
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