Cell Phones: Mobile Money

Cell phones have been booming in Africa for years, but Susie Lonie has bigger ambitions. Lonie ran a pilot program for Vodafone in Kenya that turns the cell phone into a device for transferring funds. With M-Pesa (Swahili for "mobile money"), anybody with a phone and an account can send and receive funds with about as much effort as it took to write this sentence. In Kenya, where M-Pesa was officially launched three months ago, people are using phone money to buy goods and services from each other.

Many Kenyans—and most Africans—still do not have bank accounts. The costs of moving money through traditional institutions like Western Union can be prohibitively expensive. M-Pesa's virtual money, by contrast, is tied to real money held in the user's account and transferred for a small commission. So far the program has proved remarkably versatile. When one man was robbed during the pilot program, his wife sent him bus fare. Kenyan ministries are moving to allow users to pay electricity and water bills via cell phone.

More than 65,000 users have already registered for M-Pesa with Safaricom, Kenya's largest telecom firm. Vodafone plans to expand its network of 450 agents in Kenya to 5,000 by March. It's also targeting Tanzania and Afghanistan, where a similar mobile-money pilot program is underway. Vodacom, meanwhile, is also hoping its mobile-money service can be used to tap into the $90 billion African remittance market. In July, the firm will launch a program to test remittance payments from Britain to Kenya. If it works, it plans to expand the program to India, Greece and Albania. The mobile-money trend is catching on elsewhere in Africa as well. In Zambia, a company called Celpay is conducting more than $10 million per month in business-to-business transactions over cell phones (about 2 percent of Zambia's GNP). In South Africa, telecoms are buying and selling $100,000 blocks of air time on cell-phone networks.

Businesses are using the mobile-money system in Zambia and the Democratic Republic of Congo. Bralima, the bottling and distribution subsidiary for Heineken and Coca-Cola in Zambia, hired Celpay to put its financial transactions on a cell-phone system. "You can't do anything without infrastructure," says Celpay CEO Lazarus Muchenje. "If the only thing you have is a cell phone, that's where everything is going to gravitate." That's something Africans can look forward to.