How Mobile Technology in Kenya Grew Too Quickly


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The abundance of mobile technology in Kenya is rapidly increasing. According to recent studies, 87% of Kenyans own a mobile phone. That’s more than 38 million people, and nearly twice the amount of phone users in Australia.

The increase of mobiles in Kenya has led to an improvement in quality of life. Thoroughly down to healthcare and banking, mobile has shifted the way in which communities function – a function unlike many of the western worlds. But the increase in mobile technology has led to a country that is trying to keep up; surrounded by issues of monopolisation, taxation and over regulation.

How Did The Mobile Boom in Kenya Happen?

To understand exactly how this ‘mobile boom‘ happened and how it is different from other mobile booms, it’s important to look at the history of Kenya’s telecom system.

20 years ago, Kenya had a poor and broken telecom system. Managed by Kenya Posts and Telecommunications Corporation, the industry was riddled with reports of government corruption, long wait times for customers and an expensive service charge. 300,000 landline telephones existed in the country and up until 2003, only 15% of the population had access.

Not only did the country have issues with their telecommunications, but businesses and individuals had issues with banking. The majority of the population (especially ones in rural areas) did not have easy access to a bank. Why would you walk 5 miles down the road to withdraw a small amount of money? How could lower-income families afford a banking solution?

Transferring funds from urban populations to rural populations proved tricky when paying for produce that came miles away.  Businesses and even families would load up trucks, cars and wagons full of cash to purchase goods. These goods were often from areas that were surrounded by heavy terrain. It was a system that proved a security risk.


In comes mobile technology with Safaricom. Formerly owned by Kenya Posts and Telecommunications Corporation, Safaricom thrived where KPTC didn’t. After it’s formation in 1997, Vodafone acquired a 40% stake in the company to help bring wireless service to millions of Kenyans.

Safaricom M-Pesa

With support from Multinational telecom companies arrived mobile-phone masts – easy to build and without any stable planning permission. Between 2002 and 2006 the number of mobile phones in the country increased from 1 million to 10 million.

Although newly emerging mobile technology became popular over the years, in 2007 the mobile world for Kenya changed for the better. Safaricom launched a nationwide mobile banking service known as M-PESA (translating to M-Money). A way in which mobile users could send money via a text message. No bank account needed. Users would just simply load up credit onto their phone, and then be able to send exact amounts to others via text for a small charge.

In 2007, only 19% of Adults owned a bank account and yet 54% had access to a mobile phone. With easy access to communication through mobile and a database of individuals using Safaricom of which wanted to transfer money, M-PESA had everything it needed to be successful. And so did mobile.

How Has Mobile Technology Improved lives in Kenya?

When we think of how the western world uses mobiles phones, we often think of it as a way of receiving information. Information regarding the weather, what our friends are doing and what’s happening in the world of today. And although we use our phone for other services such as purchasing products and mobile banking, we rely primarily on information from the world wide web.

In Kenya however, the primary use of mobile technology is healthcare and ‘banking’.

Money & Mobile

Joan lives in a small town called Kijabe, just north-west of Nairobi. She runs a small cafe/restaurant serving food to the local community. Despite having a supply of available food from the local markets, she needs to import cooking oils for some of her meals.

She heads down to her local M-Pesa agent, gives the guy the cash required and her M-Pesa phone account details. The money is then loaded onto her mobile. She texts the seller in Thika (an area abundant in oil refineries) and pays for a supply to be delivered to her over text.

M-Pesa mobile money transfer

Joan is just one example of the millions of Kenyans that rely on mobile technology alone to fund their living arrangements. Whether it be clothing, food or building supplies.

According to a recent study conducted by MIT and published in the journal Science, the mobile transfer system M-Pesa has lifted households over the poverty line. Between 2008 and 2010, poverty also fell within one kilometer of where six M-Pesa agents opened up.

Yet Joan and others don’t just use their mobile to buy what supplies they need, but also the services.

Healthcare In A Text

The healthcare system in Kenya heavily relies on mobile technology. With access to information being limited to many rural areas of Kenya, the healthcare system made use of mobile systems in place to educate and interact with future & past patients.

Almost 10 years ago, Both the Kenyan Government and the private sector struggled to cope with the rising demand and cost for nationwide quality healthcare services. This issue, along with a shortage of skilled health care professionals, led to Kenya’s Mobile Post Exposure Prophylaxis (Mpep).

Making use of mobile, Kenya’s Mobile Post Exposure Prophylaxis is a system that alerts customers about their next appointments and provides interactive texting experiences to assess users healthcare.

This mobile healthcare system (mHealthcare) has made it easier for Kenyans to keep track of their health. Supervisors can follow up with patients who have missed a test, whilst services such as ‘Text for Life’ keeps potential blood donors notified where donation centers need blood.

With M-PESA already in circulation, the mHealthcare was able to utilize this payment system and provide a way for citizens to mobilize funds quickly to receive health care in emergency situations. Although mobilizing funding is an issue in itself, recent applications such as M-Tiba are providing ways in which mothers and elderly people can save up money for future medical care.

So What is Wrong With All of This?

After reading all of the above, you may have come up with the conclusion that mobile technology and M-PESA has revolutionized the quality of life in Kenya. Although this is impressively true, a country that relies heavily on one mobile/payment system is a country without choice, dictated by a Monopoly.

In the UK we have a flurry of choice when it comes to our mobile networks and payment systems. From Orange, O2, Vodafone and Three to Paypal, Stripe, Visa and Mastercard. The services we use are entirely independent to us.

Kenya didn’t have that choice and it wasn’t ready for it to be decided either.

See, although M-PESA brought a major solution to Kenya’s money transfer problem in 2007, regulation and control is yet to keep up. Throughout the networks growth from infancy, Safaricom was initially never governed by the same set of rules that banks did in a regulatory environment. And a system that suffers from lack of regulation, is vulnerable to over regulation.

Over Regulation and Legislation

In 2007 Safaricom seeked authorization from Kenya’s Central-Bank to use M-PESA as a mobile money transfer service. Despite authorization and an agreement of due diligence, Kenya’s Central-Bank deemed the mobile money transfer service as a minor service that would add onto the current system. The Central-Bank and government weren’t ready for the boom and neither was regulation.

In December 2008, a group of banks reportedly lobbied the Kenyan finance minister to audit M-Pesa, in an effort to what some papers described as ‘Kill M-Pesa”. Despite the ploy being unsuccessful, a level of distrust in a service from the financial institution creates problematic issues that would eventually lead to consumers. From this, Safaricom operated/operates under a special licence from CBK, whose conditions are more relaxed compared to those of banks and other financial institutions.

In 2013 the National Treasury introduced a 10% excise duty on money transfer services without appropriately consulting industry stakeholders. Since this is a consumer tax, it was inevitably passed on to mobile money customers through high transaction charges. This lead to low-income households being pushed away from making basic transactions. Transactions that previously allowed for easier living.

In February 2017, a report by Analysys Mason proposed for an introduction of seamless interoperability of which would only occur if Safaricom and M-PESA were broken into two separate entities. Essentially reviewing that with the benefit of competition, fairer prices could be brought to consumers.

In March 2017, the US Bureau for International Narcotics and Law Enforcement Affairs, stated that:

“Kenya remains vulnerable to money laundering and financial fraud…There are about 159,000 mobile-money agents in Kenya, most working through Safaricom’s M-PESA system. There are also over 10 million accounts on M-Shwari, Safaricom’s online banking service. These services remain vulnerable to money laundering activities.”

With mobile banking being the forefront of Kenya’s financial system, it opened more possibilities for money-laundering. Despite security systems implemented in the services, the report suggested that “users could potentially use illicit funds to purchase mobile credits at amounts below reporting thresholds“.

Security Issues Regarding Mobile Technology

With Kenyans relying heavily on mobile devices and mobile payment systems, there is an increase in security risks. Phone hacking, incorrect transfers, fraud and cyber criminality all have an opportunity to thrive.

Fraud is becoming an increasing issues with M-PESA users, with recent rises. Whilst Paypal users who connected with M-PESA found themselves locked out due to fears of criminal and fraudulant behavior.

In Kenya’s current situation, M-PESA is a unique and evolving system that in some instances works vastly outside of financial regulation. A system which was born outside of government structure, leads to issues regarding over-regulation, lack of expertise to craft suitable legislation and lack of security for a system failure.

Don’t Fear; Improvement is Here.

Despite the legislation and regulation issues, M-PESA has continued to flourish and worked systematically with Kenya’s institution. The money transfer system can now be accessed through apps for smartphone users. Providing ease of use for consumers as well as great security options.

And despite the giant that is Safaricom owning a majority market share, mobile users now have some choice. Telcom Kenya (8.7%) & Airtel Kenya (19.7%) have grown in popularity over the years with reports suggesting that the three mobile network will work together to provide an opportunity for easy money transfers.  This can already be seen with Airtel Money and M-Pesa becoming interoperable.

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