M-Pesa: a financial revolution for those living in slums
M-Pesa is a mobile money transfer service, developed in Kenya and particularly popular in sub-Saharan Africa (Tanzania, South Africa, Lesotho, DRC, Ghana, Mozambique, Egypt and Ethiopia), which is having a significant impact on African society, particularly on the lives of people living in slums. In fact, this system, by facilitating access to financial services to inhabitants of the so-called “informal settlements”, who do not have access to traditional banking services, allows them to send and receive money, make payments (with a system very similar to the “top-up pay as you go”) in a simple and secure way. Launched in 2007 by Safaricom, an African telephone company affiliated to the Vodafone group, this “economic wallet” has proven to be a virtuous example of how technology can be a powerful tool for overcoming financial barriers and improving the living conditions of millions of people.
Today, M-Pesa (M stands for mobile and Pesa means money in Swahili) has transformed into a very widespread tool in transactions and payments, to the point that many people consider it a safer “place” than cash in which to store their money – with respect to banks – but also with respect to thefts and robberies. Furthermore, transactions carried out using this method are traceable, increasing transparency and reducing corruption. Economically, this method can facilitate the development of a local and resilient economy. In fact, small businesses in slums can use it to manage payments, expand their business and create new job opportunities. In the event of natural disasters (see the extreme effects of climate change) or emergencies, M-Pesa allows you to quickly send monetary aid to those affected, contributing to reconstruction and economic recovery. Furthermore, this “micro-finance” instrument, in addition to facilitating the creation of forms of “micro-credit”, allowing people to accumulate capital for long-term investments, has given women greater control over their livelihood resources (especially in the family), as well as the possibility of starting small businesses and improving one’s position in society.
© arcomai I M-Pesa agency in Githurai, Nairobi.
Its use is very simple. After registering to activate M-Pesa, the user pays an amount of money directly to a payment system agent (similar to “pay-by-text” mode), who then credits the money to the user’s account. The user then receives an SMS on their mobile phone – which does not necessarily have to be a smartphone – notifying them of the transaction and, when they want to withdraw money, they can go to a service agent, who checks that the user has sufficient funds beforehand. To hand over the money. In Kenya, there are as many as 271,000 agencies spread across the country. They are recognizable by their unmistakable kiosks, which are usually painted green. Even in the slums of Nairobi, where Safaricom has been operating for over 15 years, it is possible to find these dedicated kiosks.
M-Pesa represents a financial revolution for slums, offering people fairer access to financial services and new development opportunities. The success of M-Pesa has inspired the development of similar solutions in other countries, demonstrating that mobile technology can be a powerful tool for integrating the informal slum economy into the formal economy, fostering the development of a more inclusive economic system. This method acts as a sort of “alternative currency” to the official one, virtually contributing to ensuring that the currency is not spent outside the local area. In a context like the African one, where distances are very large and where the ownership of personal computers is not widespread, the use of the telephone to carry out ordinary financial transactions contributes to promoting economic growth fairly, guaranteeing that the benefits spread to all segments of society, including the most disadvantaged groups.