The Cultural Foundations Supporting M-PESA’s Technical Transformation of Local Economics in Kenya through Increased Money Mobility

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Less than a decade ago, in Kenya, the preferred mode of small-scale business transactions was „cash in hand‟. Though Kenyans could conduct business with whomever they pleased, it limited when and where such business could take place, thus placing certain boundaries on the culture of business relations and the growth of local economies. However, this started to change with the launch of M-PESA¹, a mobile-to-mobile money service in March of 2007. Within its first four years, it had over 9 million users, fundamentally altering the existing „cash in hand‟ boundaries on business. M-PESA lead to the start of a grassroots economic transformation as the gap in the use of both technology and financial services between urban and rural Kenyans narrowed. Its introduction has removed, as an obstacle to small, rural business the lack of access to banking services and allowed anyone with a cell phone to send and receive money. Moreover, this service is not tied to a bank account and the cash is readily accessed at any of the 40,000+ agents around the country. This paper will examine how this new mobility in money transfer has altered some of the priorities seen as necessary in the financial sector in order to stimulate the economy, postulate as to why this new idea was so quickly adopted and finally analyze how it changed the culture of business relationships in Kenya.