M-PESA - A SIDE PROJECT THAT BANKED A NATION.
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To understand M-Pesa, you have to begin in a place that has almost nothing to do with Kenya. You have to begin in Newbury, England, in the corporate social responsibility department of Vodafone Group, in the year 2002.
The man at the centre of it was named Nick Hughes. He was Vodafone's Head of Social Enterprise — a job that meant, in practice, that he was responsible for finding development-finance projects the company could champion. Hughes had been studying microfinance for a while. And the thing that bothered him was not the lending. It was the repayment.
Microfinance institutions in East Africa were lending small amounts of money to large numbers of poor borrowers. Many of those borrowers were spending an entire day a week travelling to a Faulu Kenya or a Kenya Women Finance Trust office to hand over a two-hundred-shilling installment. The bus fare alone could be a meaningful share of the loan. The whole system carried a deadweight cost that grew with every customer.
