Running Head: THE HISTORY OF SAFARICOM M-PESA 1

The History of Safaricom M-Pesa

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M-Pesa is a micro-financing, financing and primarily a mobile phone based money

transfer service chiefly operating in East African countries Kenya and Tanzania. Network

operator Vodafone launched the mobile transfer service in 2007, for Safaricom and Vodacom

(Jack & Suri, 2010). The mobile money transfer service has since expanded its services to South

Africa, Afghanistan, India, and Romania. This paper takes a review on the history of the leading

mobile transfer service in the world, which has been termed as a global success story.

M-Pesa is a word coined from Mobile, M, and Pesa, P, which means money in Swahili.

The service was officially launched in March 2007, but it had begun its operations earlier (Cook,

2015). The Department for International Development in 2002 established the Financial

Deepening Challenge Fund (FDCF). The FDCF was tasked with the objective of encouraging the

private sector steered projects to increase access to fiscal amenities. The fund awarded Vodafone

close to one million sterling pounds, which the mobile operator was required to match.

Vodafone began developing a product that would power mobile phone technology, to

deliver financial services in East Africa. Vodafone collaborated with Safaricom where the two

service providers conducted workshops with financial institutions to identify bottlenecks to

increasing access to financial services. Results of the workshop led to the formation of a

partnership between a microfinance institution, a bank, and Safaricom, to develop a preliminary

program, which would enable microfinance loans to be paid with the help of mobile phones

(Buku & Meredith, 2013). Launch of the pilot program in 2005 triggered comprehensive

research of the market to comprehend the needs of the objective clients.

The market research identified a gap in the Kenyan market, which turned out to be a huge

opportunity. A good number of Kenyans overlap the rural and urban divide, where those working

in the urban centers support those back home. The concern was sending money to residents in
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the rural areas was a difficult task. A combination of a low-cost network of agents and mobile

technology gave rise to a solution to sending money to people upcountry. It was comparatively

cheap, safe and consistent. In 2007 when there were no regulations to mobile money services,

The Central Bank of Kenya allowed for the progress of the revolutionary innovation. The mobile

transfer service was officially launched in 2007, with its core objective being sending money

home (Cook, 2015).

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References
Buku, M. W., & Meredith, M. W. (2013). Safaricom and M-Pesa in Kenya: Financial Inclusion

and Financial Intergrity. Washington Journal of Law, Technology & Arts, 376-400.

Cook, T. (2015, August 12). An overview of M-PESA. Retrieved from FSD Kenya:

http://fsdkenya.org/an-overview-of-m-pesa/

Jack, W., & Suri, T. (2010). The Economics of M-Pesa.