Unserved by banks, poor Kenyans now just use a cellphone

Just down the street at "Eva's Impressions," M-PESA agent Harrison Mumia is a satisfied customer. He's been using M-PESA since March to send money to his two sons in college and top off the balance on their prepaid cellphone accounts so they can keep in touch. "I find the service very good," he says with a wide smile after receiving a text message from his elder son saying that he got the money Mr. Mumia just sent. "It's very fast. With the others you have to wait for some time."

"We're expanding day in, day out," says Isaiah Onyango, the store manager. "We need a bigger shop."

Indeed, the initial success of M-PESA has surprised even those who helped set it up. "We have now [the number of customers that] we thought we'd have in January," says Gerald Rasugu, the manager for all M-PESA agents nationwide. M-PESA serves more than 450,000 customers, well over the target of 100,000 set at launch, says Michael Joseph, CEO of Safaricom, Kenya's largest cellphone provider, which started M-PESA. He expects to have 1 million customers by January. "I wonder sometimes if people understand how big this can be," he says.

The potential goes beyond M-PESA and Kenya. Once poor people have more access to financial products offered through trusted banking systems, investors soon follow, creating jobs, say economists.

"There's a very clear correlation between a more developed financial sector and GDP growth," says Thorsten Beck, a senior economist at the World Bank in Washington.

Banking access also helps to alleviate poverty: Recent analysis by the World Bank shows that nearly 30 percent of the difference in changing poverty rates between countries could be attributed to financial-sector development.

One concern observers have is how well services like M-PESA will be regulated. "When you get a non-bank providing a banklike service, we don't know if they'll be as safe as banks," says Mr. Pickens, noting that government regulators in many developing countries don't have laws for these services. "What we're worried about is fraud or bankruptcy damaging consumer confidence." He adds that he's not concerned about M-PESA but possible future lower-budget providers.

Safaricom executives, meanwhile, say their main concern now is how they'll be able to keep up with the growth rate, even though they point out that the service is not a big money maker for them.

"This hasn't been taken on because it will double our profits," says Pauline Vaughan, chief of M-PESA, noting that selling airtime is the core of Safaricom's business. "When I go to the market and see the impact on people's lives, I feel gratified. I've never had that feeling from something at work before."

Otieno, the security guard, says that easier access to cash allows his wife to run their farm of sugar cane and corn more efficiently. And it made a difference for his very young son as well. Several weeks ago, the 9-month-old fell ill and needed quick attention. "For emergencies [M-PESA is] really good," says Otieno.

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