The mobile technology industry growth has not only impacted South Africa, but also other African countries such as Kenya where financial institutions have been undergoing transformation through information technology (IT) (Okiro & Ndungu, 2013). Kenya is regarded as a global leader in mobile banking (Bonface & Ambrose, 2015; Rouse & Verhoef, 2017). Furthermore, the Kenyan mobile landscape is described by its fast acceptance of mobile grounded products, with mobile banking as one of such products (Kweyu & Ngare, 2013). According to Bonface & Ambrose (2015), the victory of mobile banking in Kenya can be expressed through M-Pesa. The victory of M-Pesa invigorated many opponents within Kenya and spread through East Africa (EADB, 2019).
Kenya chose a broad and varied use of mobile payment systems (Rouse & Verhoef, 2017). M- Pesa was launched by Safaricom and Vodafone who were major mobile service providers (Kweyu
& Ngare 2013); Bonface and Ambrose, 2015). M-Pesa is a mobile-based payment system which targeted the unbanked prepaid users in Kenya (Wambari, 2009). According to Bonface &
Ambrose (2015), within nine months of the M-Pesa launch, 10 000 users were registered to benefit, and ten years later, 11 million also registered, making 2.2 million transactions per day. It is estimated that about 70% of all households in Kenya use M-Pesa (Rouse & Verhoef, 2017).
Looking back in 2007, there were 10 000 customers listed with M-Pesa compared to this day,
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with a projected 23 million mobile money users in Kenya through a number of mobile financial platforms, with 12.5 million being active (EADB, 2019). M-Pesa has been seen as a treasured means for reasonably well-compensated Kenyans in metropolitan regions to send money promptly and at a low fee to the less prosperous household members in countryside regions (EADB, 2019). Furthermore, the number of registered users of mobile banking cannot be compared to individual accounts in commercial banks in Kenya. The study by Kumar, McKay &
Rotman (2010) shows that communication companies have kept the technology standards very high and the Kenyan population is benefiting after being locked out by banks. The triumph of mobile financial services is motivated by the Kenyan skill to enter the market owing to the prevalence of mobile phone users, enhanced mobile network exposure and the low costs of launching mobile money agents which allow more product outreach and a reasonably low operational fee structure (Rosengard, 2016; EADB, 2019).
Sixty percent of the GDP in Kenya comes from mobile money (Penicaud, 2013). In Both Kenya and Ghana, the mobile device has become the number-one payment instrument of choice representing 87 and 82 percent of each country’s GDP respectively (Christian, 2021). M-Pesa facilitates the person-to-person exchange of money using mobile phones. To ensure the exchange, the M-Pesa system registered agents all over the country who convert mobile money into physical cash and vice-versa (Jack & Suri, 2011). M-Pesa allows users to deposit into an account stored on the mobile phone. An SMS is used by the owner and it requires a Personal Identification Number (PIN) for the recipient to collect the money at registered outlets or to transact (Rouse & Verhoef, 2017). Another product innovation in Kenya led to the launch of M- Shwari, a savings and cheaper loan facility. Just like with M-Pesa, M-Shwari registered 9 million customers and attracted deposits estimated at 135 billion Kenyan shillings within the first two years of launching (Rouse & Verhoef, 2017).
It is worth noting that the challenges that were being experienced by mobile banking customers in Kenya included system delays which are also a prospect to improve service delivery (Okiro &
Ndungu, 2013). Kenyan banks need to resolve the customer service challenge by educating the frontline workforce, improving social media promotion and improving complaint feedback intervals (Cornerstone Performance Solutions, 2019). Kenya stands out in the fast growing industry with more prospects of advancement and profitability. However, M-Pesa has been used to launder money, entice dishonest police officers and as a disbursement method in abduction and blackmail (Peterson, 2019).
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Mobile banking has spread to other African countries. In 2008, M-Pesa was launched in Tanzania, but it was not as attractive as it was in Kenya (EADB, 2019). With the slow uptake in Tanzania, Vodafone made strategic changes on use of M-Pesa technology. In March 2013, the change saw Tanzania with 5 million M-Pesa users (GMSA, 2014). In 2015, Tanzania became a leader with
“the highest proportion of registered mobile money account users per 1 000 adults in Africa- 1208 per 1000, compared to 1018 in Kenya, 762 in Uganda and only 76 in South Africa” (GSMA, 2014).
Despite the poor banking service networks in Tanzania, market growth was noticed. The Tanzanian community accepted the liberal market as Vodacom doubled its network. Vodacom became the market leader in Tanzania for 3G service provision after closing the 2G gap (Rouse
& Verhoef, 2017). M-Pesa complemented these efforts by securing interconnections with Tanzanian banks which gave Vodacom access to both the banked and the unbanked in the country.
M-Pesa developed into a business tool to do more than just transferring money. In the ten years of operation, Vodacom Tanzania now has 8.2 million active users (IT-Online, 2018). M-Pesa has afforded both the urban and rural areas of Tanzania inclusion to the financial system, contributing to the economic growth, employment opportunities and continuous business operation, and giving opportunities to communities through M-Pesa. IT-Online (2018) noted that over 35% of Tanzania’s GDP is transacted through M-Pesa on a monthly basis, with about 1.2 trillion transactions each month. This afforded Vodacom M-Pesa Tanzania an award for becoming the first operator in the world to get such prestigious GSM award (IT-Online, 2018). It was further noted that Tanzania is leading on importing more smartphones compared to other East African countries, at approximately 100 000 smart devices a month and at a cheap price, with the young people dominating the market of users (Fernandes, 2019). The mobile money transactions in Tanzania are contributing over 47% of the country’s GDP which is critical for economic growth.
This shows the great impact that mobile usage has on some economies and how technology accessibility plays the role in the process (Fernandes, 2019). The research conducted in Tanzania by Richard & Mandari (2017) found that consumers’ consciousness and apparent simplicity to use mobile banking have a fairly higher effect on the usage of mobile banking services compared to perceived risk and cost to transact.
It is important to note that M-Pesa was not attractive in the South African market as there were already other cheap methods of sending and receiving money such as Shoprite at R9.99 (Rouse
& Verhoef, 2017). The other reason is the strict regulations which require the mobile money provider to be registered with the SARB, which is a total opposite in other African countries.
Goldstuck (2014) noted that the error of judgement was made, where Nedbank had a low uptake
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for M-Pesa among the low income groups in rural areas. No attempt was made to find a broad and informal method matching that of Kenya. Even the South African M-Pesa relaunch in June 2011 and the further relaunch in 2014 did not work. According to Costello (2016), Vodacom decided to discontinue M-Pesa in South Africa as it never attracted the majority, considering the 50 million population that South Africa has. The other reason was the fewer future expansion opportunities as South Africa is highly financially inclusive.