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In the Global South, mobile money has had a transformative effect on the lives of many individuals, particularly those who are struggling financially.
Judith Owigar explains how it enables residents to have access to essential services like water and electricity.
Banking and fixed-line communications are uncommon in poor nations, while mobile phones are abundant. For these reasons, mobile money has emerged as a popular method of depositing and exchanging money, as well as converting it back into cash.
Safaricom, a Kenyan affiliate of Vodafone, introduced M-Pesa in March 2007 (M stands for mobile, and Pesa means the money in Swahili). With at least one person in 96 percent of Kenyan homes using it, M-PESA has become Kenya’s most popular mobile money service. By utilizing a smartphone app, consumers may now transfer, receive and save money safely and securely through their mobile phones.
Send and receive money, top-up airtime, make bill payments, and much more are all possible thanks to this service for millions of individuals who have a mobile phone but no bank account. In addition to that M-Pesa has a significant effect on the finances.
Moreover, as it allows its customers to transact their money in a short period of time there are many people in Kenya who use them for money transactions and one of the examples of this is Forex trading, which is the world’s largest financial market. As the popularity of forex trading increases in Kenya many people start Forex trading in Kenya using M-Pesa, because of its several advantages, effectiveness, and just the way it works. M-Pesa also dramatically decreases the danger of street robbery, burglary, and petty corruption in cash-based countries where only a tiny percentage of the population has access to traditional financial services. More than a decade after the launch of the M-Pesa service in the Democratic Republic of Congo (DRC), it is now available in 10 nations. Almost 29.6 million active clients were handled by M-network Pesa’s of 287,400 agents by the end of 2016. In addition, there were 614 million monthly transactions.
Safe storage and transmission of money may be achieved with M-Pesa. Saving money in a mobile wallet is safe since the funds are kept in the cloud. Passwords may be used to safeguard both a mobile phone and the mobile money service. It has been shown that among women, M-Pesa has allowed them to leave subsistence farming and minimize their dependency on various part-time jobs, according to the research titled “The long-term poverty and gender consequences of mobile money.”
Small sums of money are quickly and reliably sent through M-Pesa, making urban-rural networks better able to withstand unanticipated downturns in income or other adversity, making them more robust. “Dual system” is the mutual assistance offered by rural homes and family members who go to the metropolis in search of a job, according to a 2008 study by Olga Morawczynski. After a recession, urban employees’ remittances help their rural family members make ends meet; in exchange, the rural community provides assistance to metropolitan workers.
An intelligent, long-term, collaborative strategy to address economic, social, and environmental difficulties that develop as more and more people congregate in densely packed regions, squeezing already limited resources, is what Ericsson defines as “a sustainable city.” Payment for utilities including water, electricity, and transportation (e.g. car-sharing services) may be made using M-Pesa in Kenya thanks to smart metering. With the use of this information, customers may better manage utility expenses. A citizen’s quality of life and financial outlook improve as a result of this approach.
Using a hierarchical structure, the M-Pesa ecosystem is organized from the highest level (the bank) down to the lowest (agents and subagents). Many M-Pesa customers engage with the system at the level of the sub-agent – that is, where they deposit or withdraw money. Most of Kenya’s M-Pesa stores are sub-agents, which means they work under the direction of a principal-agent (another agent but at a higher level). It is the responsibility of one or more principal agents to supervise a large number of subagents. Additionally, sub-agents play a variety of responsibilities.
For utility businesses and government agencies, the C2B transactions have resulted in significant improvements in service delivery, particularly in the area of bureaucratic payment procedures.
Customers in the energy industry are increasingly using pre-paid smart meters as a result of the widespread usage of mobile money. Households may pay-as-you-use electricity, solar power, or liquefied petroleum gas using pre-paid smart meters. M-Pesa is also used by clients of the water provider to purchase water credits when they need them. This is revolutionary for homes with limited resources since it gives them more control over when and how they consume electricity and water.
In Africa’s informal settlements, water scarcity is a major issue. Sub-Saharan Africa’s urban people tend to have greater access to improved water supply than rural ones, although intra-urban differences may be very large. Rapid urbanization and climate change are anticipated to exacerbate gaps in access to water in the city, making it more difficult to provide ecologically and financially sustainable water services.