Acumen Blog

mobile money

East Africa & India: Using Mobile Money

Keya is the Innovation Associate at Acumen in the New York office. She recently visited several of Acumen’s investee companies on a trip to East Africa, and discusses her experience below.

Africa is a continent of colors; the deep blue of the sky, the brown roads snaking through oceans of dense green like rivulets, and the red dirt blankets everything. As you travel through Uganda and Kenya, you can’t help but feel immersed immediately, as I did on my trip there this past October.

As an Indian, it felt familiar to me. The same small houses, though with different looking inhabitants, the same signs populated tiny villages and towns even if in different languages, the same vehicles clogged the arteries of the towns with different license plates, and the same friendly smiles were ready and eager to greet me.

During my first two years working with Acumen in India, I was lucky to travel around the country. I visited LifeSpring Hospitals where I learned about the critical need of affordable maternal healthcare. I saw the impact Edubridge has helping young unemployed adults secure jobs in urban centers. I learned how Husk Power Systems transformed the communities by giving them access to energy.

I carried these experiences with me when I visited East Africa, which faces many of the same challenges, and indeed a lot of the same opportunities as well. However, one area where a gaping divergence is clear is in the use of mobile money and mobile payments. In Kenya, it is estimated that two-thirds of the adult population use M-PESA for transactions ranging from paying their bills to taxi rides, and 25% of Kenya’s Gross National Product flows through it.

mobile money

The advantages of mobile money are clear. Most of the poorest people in the world are unbanked, they live in far to reach places, with minimal access. Mobile money provides access to cash without needing to get your hands on the physical currency. And all you need is your mobile phone, a device that most people already have. Mobile payments are convenient, inexpensive to transmit, and efficient.

IMG_3297

Weighing tea leaves at Virtual City

We traveled north to the lush tea fields of Kenya to visit Virtual City’s operations at the Iriaini Tea Factory. As we entered the plant, the aroma of tea leaves took me back to my childhood days spent at my relative’s home on the tea-fields of Munnar, in Southern India. Virtual City provides mobile solutions to tea-sellers in Kenya. Once the tea leaves are accurately weighed, data is transmitted to farmers on their mobile phones, and receive their payments through mobile money services. Furthermore, because they now have an account of their transactions, these tea-pickers are gradually building credit histories and are steadily being equipped to get loans from banks.

Further North-West of the Iriaini Tea Factory, we visited Juhudi Kilimo’s operations in Kitale. Juhudi offers asset backed loans to farmers across Kenya. These farmers now have access to their loans through the ease of their mobile phones, saving a substantial amount in transportation costs to and from the closest branch – money that can in fact go to paying back their Juhudi loan.

Juhudi Kilimo watermelon cow

Smallholder farmers use Juhudi Kilimo’s financing products to acquire assets like dairy cows

Another Acumen investee, M-KOPA, is a partnership between d.light and Safaricom. M-KOPA sells a unique solar household lighting system produced by d.light, which allows people to pay their ‘utility’ bill with an easy top-up system through M-PESA. While this may not seem revolutionary at first thought, off-grid families now have the ability to pay for affordable, clean, and renewable energy at their convenience, as and when they earn income.

M-Kopa provides financing for solar home systems

M-Kopa provides financing for solar home systems

Undoubtedly, there are many ways that mobile money could transform the lives of the poorest Indians. The Economist tells the story of an individual who wanted to transfer money to his mother for medicines as she was deathly ill. His mother lived in a village with no banks nearby, and so by the time the money arrived it was too late. This scenario is all too common. Customers of Husk Power Systems, Edubridge, LifeSpring, and countless other social enterprises could all benefit from the use of mobile money, and indeed, perhaps the companies could too.

A New York Times article recently reported that ‘India is probably the most exciting market for mobile money in the world’. It is interesting that the mobile money phenomenon has not caught on quite as yet in India. A recent study by Deloitte claims the reason is all the stakeholders involved in an effective mobile payment service – financial services players, regulators, telecom and technology players – have not managed to collaborate effectively. Thanks to India’s massive population, high levels of cell phone penetration (it is estimated that India has 870M subscribers, almost three times the population of the United States) and low airtime rates, even a modest conversion to mobile money could make the South Asian region the largest market in the world – and more importantly benefit the 350M below the poverty line.

Mobile money has the potential to solve many problems faced by the poorest of the poor in India, and it’s exciting to see that is starting to be recognized. The benefit that a simple technology like mobile payments can afford the poor is more than financial inclusion; it’s a matter of improving choice – it’s a matter of dignity.

It is clear to me on my recent visit that the gap between India and East Africa was not wide, and in fact the similarities are striking – but in the realm of mobile money, India has a lot to learn from its neighbors across the sparkling blue Indian Ocean.

Comments

ANNOUNCING A NEW INVESTMENT, FIRST ACCESS

Acumen announces its new investment in First Access, a data analytics company improving access to formal financial services for low-income East African communities. In East Africa, only 22 percent of the population has access to formal financial services with the region’s poor having even less at 10 percent. First Access presents an opportunity to increase the ability of these low-income communities to save, manage risk responsibility, invest in such critical services as education, and ultimately rise out of poverty. [Read More]

ANNOUNCING THE 2015 PAKISTAN FELLOWS

Acumen is proud to announce the selection of our third cohort of Pakistan Fellows. After a competitive application process, we’ve chosen a diverse group of 20 leaders working in provinces across the country. This year’s Fellows are fighting poverty and changing lives across Pakistan through unique initiatives that range from advocating for vulnerable prisoners’ rights, to creating solutions to address low-quality education, to developing branchless banking channels for low-income customers, and more. Read more about each Fellow and their inspiring work below. [Read More]

Lean Data Goes Deeper

One of the most interesting questions we’re grappling with right now on the Impact team at Acumen is how to develop a more robust, rigorous, and transparent form of quantifying the social value our companies create. While I don’t believe we will ever fully understand all the social value created – and while there will always be room for debate and interpretation – I do think today we have the tools to get a lot closer to customers and hear how they value products. [Read More]

ANNOUNCING THE 2015 INDIA FELLOWS

Acumen is proud to announce the selection of our second cohort of India Fellows. After a competitive application process, we’ve chosen a diverse group of 20 leaders working in 13 states. This year’s Fellows are fighting poverty and changing lives across India through unique initiatives that range from providing affordable menstrual hygiene products to marginalized women, to making quality education available to children in conflict zones, to designing innovative sanitation solutions for the urban poor, and more. Read more about each Fellow and their inspiring work below. [Read More]

ACUMEN NAMED ONE OF WORLD’S TOP 10 MOST INNOVATIVE COMPANIES IN NOT-FOR-PROFIT BY FAST COMPANY

Fast Company today announced its 2015 ranking of the World’s Most Innovative Companies in Not-For-Profit, honoring leading organizations and rising newcomers that exemplify the best in social and philanthropic innovation. Acumen earned the No. 7 spot on the annual list in recognition for its Lean Data Initiative—a project launched in 2014 to find more efficient, cost-effective ways to measure and evaluate social impact. [Read More]

ANNOUNCING THE 2015 EAST AFRICA FELLOWS

Acumen is proud to announce the selection of our fourth cohort of East Africa Fellows. After a competitive application process, we’ve chosen a diverse group of 21 leaders from five different countries in the region: Kenya, Uganda, Tanzania, Rwanda and, for the first time, Ethiopia. This year’s Fellows are fighting poverty and changing lives across East Africa through unique initiatives that range from providing much-needed ambulance services to helping make hygienic sanitation more accessible and affordable to empowering young women to start viable agro-enterprises and more. Read more about each Fellow and their inspiring work below. [Read More]

We Are Each Other’s Destiny

To reflect on the life of Dr. Martin Luther King, Jr. is to consider deeply our human interconnectedness and the world we want to build. Each year on this day, I re-read his extraordinary, elegiac “Letter from Birmingham Jail” to remember his commitment to human equality and the price he paid. I read it to remind myself of the power of idealism grounded in pragmatism. I read it to renew my belief in our individual and collective abilities to help bend the moral arc ever more toward justice. [Read More]

Let’s Work Together

Acumen has offices in New York, Mumbai, Karachi, Bogota, Nairobi and Accra. Last August, Avinash Mishra, a Senior Portfolio Associate in the India office, and Keya Madhvani, the Internal Communications Associate in the New York office, were nominated to attend the One Young World Summit in Dublin. Below, they share lessons learned at the summit.  [Read More]