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Out of Thin Air: The behind-the-scenes Logistics of Kenya’s Mobile-money Miracle, an Analysis

Updated on June 16, 2015


Out of Thin Air: The behind-the-scenes Logistics of Kenya’s Mobile-money Miracle (2010) is an article from “The Economist” that appeared in the June 10th 2010 issue. This article features a new financial product—the ‘M- PESA money- transfer service which has striking similarity to that of the m-commerce that was previously introduced in the United States back in the early '90s.

The M- PESA money Transfer service is operated by Safaricom, Kenya’s largest telecom company. It provides alternative to Kenyans living in urban communities to send money to their loved ones living in the provinces. It beats having to spend time falling inline on banks and other money transfer services. The convenience, security, and portability of doing the transaction anytime, anywhere made M- PESA a preferred method for money transfer for 9.5 million Kenyans, that’s over 20 percent of the total population (The Economist, 2010).

M- PESA works by converting the user’s cash to ‘e-float’, wherein money is digitalized and is credited to their phone. They could exchange or purchase ‘e-float’ through accredited banks and partnered agents who also sell airtime/ prepaid cards. When they want to send money or ‘e-float’ to another person, they would just key-in the amount they want to send. The receiving party—who also would have to be a Safaricom subscriber to be able to receive the e-float, would just simply show his phone—which contains the text message and reference number to the transaction, to redeem the e-float and exchange it to cash. “More than 17,600 retailers have signed up as M-PESA agents—far outnumbering Kenya’s 840 bank branches (The Economist, 2010).”



The new financial product of Safaricom is an answer to a pressing demand for an effective means of transferring money. Because of the high demand for a more effective, economical, and easier way of wire-transfer, mobile banking was the next solution that was being tapped. With m-commerce already well established, it was just a matter of exploring the right technology and ensuring that the right security parameters where in place. Furthermore, because the banks were not able to handle the needs of the clients, it was an opportunity for a new industry to emerge; and Safaricom has the right tools, market, and capabilities to answer the pressing demand of the people.

But more than just the market, demand, and technology, what made the mobile-money transfer even more successful is that it has the right balance of additional elements: partnership with banks—which of course is crucial because they are after all endeavouring in the ‘moving-money’ business; support from partnered agents who are willing to risk moving large amounts of cash around; simple marketing plan that they were readily able to pitch to both agents and clients; and the right technology to mobilize the system.

In a way, it is more than just institutions and technology working together, but a merger of human relations as well, working together to make a system work. Introducing M- PESA money Transfer service for public use might seem simple enough, but the behind-the-scenes work that go unnoticed to make all transactions flow smoothly is something that mostly goes unappreciated.


The Economist (2010). Out of Thin Air: The behind-the-scenes Logistics of Kenya’s Mobile-money Miracle. Retrieved 15 January 2011 from <>.


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