BACKGROUND OF THE PROBLEM
M-Pesa is one of the clever invention merchandises of Safari- com Kenya, it is a nomadic money transportation that enables Safari-com endorsers to direct and have money to anyone of the nomadic web. It was developed by Vodafone, which holds a 35 % portion in Safari-com. The “ M ” stands for Mobile. Pesa is Swahili for money. Since its debut in March of 2007, the M-PESA money transportation system has seen its popularity with the un-banked population rush, doing the application a great success all over the state. For illustration, between March 2007 and September 2008, M-pesa individual to individual transportations hit the Sh54 billion grade with December entirely last twelvemonth accounting for an extra Sh14 billion. To name M-PESA a success would be an understatement. Today you can utilize your phone to pay for cab drives and electricity, to acquire money out of ATMs without having an ATM card or even holding a traditional bank history. This has caused heebie-jeebiess in the banking industry. It is worthy observing here that most of the Kenya’s live in local remote countries and do non hold entree to banking services.
The M-PESA service does non necessitate users to hold bank histories. All they need to make is registry at an authorised M-PESA agent by supplying their Safari-com nomadic figure and their designation card. Once registered, the user can purchase digital financess at any M-Pesa agent and direct that electronic hard currency to any other nomadic phone user in Kenya by SMS. Recipients can either deliver this for conventional hard currency at M-Pesa agent mercantile establishments or purchase Safari-com airtime for themselves and other endorsers. An M-Pesa-enabled Mobile phone can besides work as an electronic billfold, keeping up to ˆ500 ( 50,000 Kenyan shillings ) .
The service has lowered dealing costs for users in footings of money, clip and hazard. An urban inhabitant that used to direct money to his atomic household, other relations or anyone else utilizing the station office, coach services or friends going place can now remit financess rapidly and safely for a little fee. The receiver can so obtain hard currency utilizing an M-pesa agent of pick. The service is being used to do payments for lower value goods and services, therefore increasing the speed of concern. You can higgle with a peddler on the street and do an electronic payment for whatever you buy.
Alternatively of going upcountry to pay school fees or cater for unanticipated disbursals, parents can now hold with friends or instructors to do payments on their behalf after acquiring the money transferred electronically to them. Peoples who were excessively hapless to open a bank history can now hold a dealing history at their disposal. Merely about 2 million Kenyans have bank histories out of a population of around 36 million. Therefore, the possible to broaden entree to fiscal services is monolithic.
Though the merchandise has is clearly gained prominence among the low income earners, high income earners Small and medium organisations it has non gone down good with the major Banking key participants who are opposing it.
90 % of Kenyans do non hold an history in a regular bank. Across Africa, merely 20 % of households have formal bank histories, harmonizing to a World Bank study. In Tanzania the per centum is every bit low as 5 % , and in Liberia 15 % . But the proliferation of Mobile telephone services around the continent has opened a new manner to widen fiscal service
1.1 Research inquiries
What are the fiscal demands that M-Pesa meets as an agent of money transportation?
Is the M-Pesa merchandise dependable and accessible in run intoing the fiscal demands in Kenya?
1.2 Research Aims
1. To happen out the effects/ parts of M-Pesa as a merchandise of Safari com to society
2. Find out the impacts of M-Pesa in the banking sector in Kenya
3. To happen out who are the chief population sections targeted by M-Pesa merchandise in Kenya
4. To happen out the methodological analysiss used by Safari com as an M-Pesa supplier to fulfill clients demands
RATIONALE OF THE RESEARCH
Known as M-pesa, or nomadic money, the service is expected to revolutionise banking in a state where more than 80 % of people are excluded from the formal fiscal sector.
Apart from reassigning hard currency ; a service much in demand among urban Kenyans back uping relations in rural countries, clients of the Safaricom web will be able to maintain up to 50,000 shillings ( ?370 ) in a “ practical history ” on their French telephones.
Mobile phone growing in Kenya, as in most of Africa, has been singular, even among the rural hapless. In June 1999 Kenya had 15,000 nomadic endorsers. Today it has about 8 million out of a population of 35 million.
In clip, M-pesa will let people to borrow and refund money, and do purchases. Companies will be able to pay wages straight into workers ‘ phones ; something that has already attracted the involvement of larger employers, such as the tea companies, whose workers frequently have to be paid in hard currency as they do non hold bank histories.
The M-pesa undertaking is being watched closely by nomadic operators around the universe as a manner of aiming the multibillion lb international hard currency transportation industry long dominated by companies such as Western Union and Money gm. Harmonizing to the World Bank, remittances sent from about 200 million migratory workers to developing states totalled ?102bn in the twelvemonth 2007. The GSM Association, which represents more than 700 nomadic operators worldwide, believes this could quadruple by 2012 if transportations by SMS go the norm. Vodafone has entered a partnership with Citigroup that would shortly let Kenyans in the UK to direct money place via text message. The charge for directing ?50 is expected to be about ?3, less than a 3rd of what some traditional services charge.
SME’s in Kenya are doing usage of M-pesa. This is chiefly because the service has been found to be liquid, flexible, acceptable, safe and dependable. M-pesa has besides had an impact on microfinance establishments since members send practical financess to their group leader, and the group leaders give the financess to the microfinance organisation.
Users can direct between 100 Kenyan shillings ( $ 1.5 ) and 35,000 shillings ( $ 530 ) via a text message to a coveted receiver ; even person utilizing a different nomadic web. The receiver so can obtain the hard currency from a Safaricom agent by come ining a secret codification and demoing personal designation.
M-pesa gives people excessively much entree ( 24/7 ) to their hard currency which could sabotage redemptive civilization. Analysis shows that the M-PESA-based hard currency transportations are secure, enable a speedy exigency response, are cost-efficient and empower communities.
Cash transportations give families entree to a wider scope of trade goods. The injection of hard currency besides strengthened the local economic system.
The function of information engineering in authorising the hapless – the ability of nomadic phones to direct SMS expands the scope of inexpensive communicating available to the hapless. Isolated communities now know how to have remittals by utilizing M-PESA. Communities besides see advantages in utilizing their nomadic phones to develop early warning and security dismay systems to forestall cattle-rustling. Women besides see income-generating chances by offering informal payphone services to other members of the community.
The increasing velocity of minutess has been a critical portion of the invention procedure. At the cutting border of money engineering, corporate America is traveling beyond batch processing and air messengers, to webs for incorporate accounting and payments treating systems. The definition of an instantaneous money transportation — non by cheque, but by ATM or direct computing machine connexion — is traveling inexorably toward “ existent clip, ” on a par with exchanges of currency, but without the demand to be physically face-to-face. And the closer engineering brings us to real-time remote payments, the closer we are to genuine 24-hour banking and trading, and a world-wide set of assets that might be used for wealth storage, at least for those who are willing to accept some currency hazard. First, it is the immature, male, urban migrators who are driving the consumption of services – client acceptance. Bing early adoptive parents of engineering, these migrators are normally better educated and gain higher incomes than those in the small town. Because these migrators are the transmitters, they can take the channel for money transportation. They so influence receivers in the rural area—who are normally female, less educated and poorer—to besides use M-pesa.
M-pesa has been successful because it relies on traditional patterns and constructions and modernizes these characteristics. It is so a theoretical account based on autochthonal payment patterns, extended nomadic phone webs and a big distribution web. With this service, Kenyans can open up a digital history on the cell phone, send and have money, pay measures like electricity and obtain recognition. Users can besides retreat money from ATMs
The distribution web is based on agents who were already present in markets. Agents receive basic preparation from M-pesa. Merely three months after the launch of M-pesa, the service had 400 agents, compared to 450 bank subdivisions and 600 ATMs in Kenya. By mid 2009 M-pesa had 3400 agents.
Safaricom’s M-pesa service in Kenya was one of 10 private sector enterprises in 2008 to be recognized by the World Business and Development Award as doing a important part to the UN Millennium Development Goals. M-pesa has besides been recognized by several other awards, including:
Stockholm Challenge 2008 – Winner, Economic Development class ( M-pesa )
Kenyan Banking Awards 2007 and 2008 – Special Award for Product Innovation ( M-pesa )
Global Mobile Awards 2008 – Nominated, Best usage of Mobile for Social and Economic Development ( M-pesa )
Global Mobile Awards 2008 – Winner, Best Broadcast Commercial ( M-pesa ‘Send Money Home’ TVC )
AfricaCom Awards 2008 – Changing Lives award and Best Solution for Rural Services award
MSK Warrior Awards 2008 – Best Innovation.
Kenya’s independent Financial Sector Deepening Trust ( FSD ) , which aims to back up the development of inclusive fiscal markets in Kenya, carried out a study of M-pesa usage in 2008. The study aimed at establishlishing the chances and challenges presented by the service and how it could be introduced in other states.
The study of 3,000 indiscriminately selected families across Kenya, 300 indiscriminately selected M-pesa agents and 50 M-pesa Head offices found about 40 % of families use M-pesa, with 63 % directing regular fiscal support. Of those surveyed:
90 % believe their money is safe with M-pesa
81 % find M-pesa really easy to utilize and a farther 15 % say it is rather easy to utilize
84 % say losing M-pesa would hold a big negative consequence.
Compared with options, those surveyed find M-pesa is:
Quicker ( 98 % )
More convenient ( 96 % )
Safer ( 98 % )
Cheaper ( 96 % )
Concern Worldwide pioneered the usage of M-pesa for majority hard currency transportations during the post-election exigency in early 2008 in the Kerio Valley, one of the remotest parts of Kenya. During the force, cattle cattle thiefs attacked communities in the Kerio Valley, plundering their farm animal and displacing them. Concern’s initial response was to supply nutrient assistance, but transporting and administering nutrient proved really dearly-won and insecure. Cash transportations were seen as a manner of get the better ofing the challenges posed by the terrain and the security state of affairs.
The survey will be based in Nakuru a town which is surrounded by a web of little small town towns, besides consisting of low and in-between income earners
The survey proposes to utilize both secondary informations and primary informations to accomplish its aims. The secondary informations will be obtained from Safari-com web site on issues of corporate and societal duty, monthly newssheets and one-year studies.
The research will prefer qualitative as it is considered as the most appropriate on history of it being conformable to utilize of advanced techniques in researching comparatively undiscovered research countries ( kamoche, 2001 ; Yin 1994 ) .
The research worker will besides utilize mixture of research methods and these are ; semi structured questionnaires, studies and unwritten interviews to roll up informations.
Quota sampling will besides be used to roll up informations sing population sections targeted by M-Pesa merchandise.
3.1 Data analysis and methods
The information will be summarized and classified in footings of variable aims of the survey in order to heighten farther analysis and processing. The responses to the assorted points will be coded so keyed in a matrix for this intent. The information will be entered, edited and cleansed to guarantee right entry of the response. Descriptive ( frequences, agencies, standard divergences and graphical illustrations ) will be used for the analysis to assist in set uping the findings on the aims of the survey
3.2 Information Validity and Reliability
The questionnaire will be pre-tested with Safari com to reliable dependability. The pre- testing study/pilot survey will be done, 100 kilometer from Nakuru off from the survey country and will be done to avoid any possible influence on test respondents before the existent study
Due to the size of general population in Kenya, clip within which the research should be completed and the cost that would be involved if all the state were studied, the survey will cover a transverse subdivision of Nakuru occupants who will be stand for the remainder of the state.
This survey hence proposes to utilize transverse sectional study because it is inexpensive to make and the consequences from the sample can be inferred to the larger population
The M-Pesa merchandise has been in the market for a hardly two old ages and hence there isn’t much literature about it nevertheless the consequences from this research will steer future research in this country
4.1 Ethical issues
The first measure was to seek permission from direction by composing a missive to Safari-com direction. This was of import get mandate.
Since assorted people including Safari- com employees, general populace and other stakeholders will be interviewed it is of import to seek permission from these people before questioning or giving them questionnaires.
Before beginning had the research worker will seek permission from direction by composing while guaranting them that the transcript of research would be provided and none will be published outside without their permission. Under no fortunes would personal inside informations to be divulged harmonizing to the information protection Act. It will be duty of the research worker to guarantee participants that it will be their exclusive determination to notice or give sentiment. Another of import issue is clip and therefore it is upon the research worker to happen clip for interviews non to interrupt any organisations concern.
Alice t. Liu & A ; Michael K. Mithika- the recognition agency and m banking research study- USAID, April2009.
hypertext transfer protocol: //news.bbc.co.uk/business: Mobile phone line of life for universe ‘s hapless, 27/02/07
hypertext transfer protocol: //www.cato.org/pubs/books/money15.html
hypertext transfer protocol: //globaltechforum.eiu.com/index, Kenya: Safaricom aims for the large game
hypertext transfer protocol: //www.gurdian.co.uk/ : Kenya sets universe Kenya sets universe foremost with money transportations by Mobile, 20/03/2007
hypertext transfer protocol: //www.safaricom.co.ke, Annual consequences presentation, 21/05/2009
hypertext transfer protocol: //www.the times100.co.uk/ instance survey: Kenyans to utilize nomadic phones to pay public-service corporation measures