The Genesis of Mobile Money, Why & How – Kariuki Gathitu

This article is based on my friend Kariuki Gathitu’s presentation at Card, ATM and Mobile Expo.

Why Mobile Money for Nigeria?

Quick Facts:

Population of over 150 million and has less than 22 million bank accounts. More than 85% are unbanked. Overall financial development and access to financial services remains crucial to economic growth and poverty reduction in Nigeria. Total mobile money transactions in emerging markets are expected to grow at an annual compound rate (CAGR) of 54%, from $25 billion in 2010, to $215 billion in 2015.

There is also a forecast that mobile money subscribers will grow from 133 million users in 2010 at a growth rate of 40% to reach 709 million users in 2015.

No doubt, financial inclusion and cashless settlements in all transactions will definitely play a significant role in shaping Nigeria’s economy in the near future.

Mobile money adoption will deepen formal banking in Nigeria by drawing the unbanked or under-banked into the formal financial services sector, while enabling the economy to shift to more efficient and reliable modes of financial transactions.

Added mobile penetration could boost Nigeria’s GDP ($193B) to outgrow Egypt’s ($218B) by 2020. This prediction is a result of increased mobile penetration and its positive effects on economic growth.


Enhanced financial services: The ubiquity of data transmission that mobile provides means that financial services can be extended to reach people who were previously unreachable.

Job creation and increased revenues for organizations: Mobile money as a new industry that is precipitating new investments for new ventures, new jobs and new revenue streams for existing companies. Jobs for Mobile money agents. Safaricom believes MPESA has created 36,000 new jobs.

Formalizes informal sector: Mobile money formalizes the informal financial sector, enabling savings, loans and investments in lieu of “cash under the mattress.

Integration of Mobile payments: Integrating mobile money platforms with websites to allow direct remittance from credit/debit card to phone will be a big step and one that could open up a whole new industry with stiff competition on commission rates.

Mobile money for business support: Mobile money as an infrastructure supporting new businesses in other industries

Advantages of mobile money transactions and systems

  • It reduces cost of operation.
  • It increases customer satisfaction because you can render personalized services.
  • Ease of tracking and documenting transactions.
  • For government, it helps in the area of taxation, budgeting, planning, accountability and improved government services.
  • Efficiencies of digitization: Mobile money enables efficiencies associated with digitization and reduces frictions associated with cash (such as theft or ‘shoe leather costs‘)
  • Diversification of risks: In conjunction with other savings methods such as bank accounts, informal savings clubs, and keeping money at home; is done to diversify risk affordable financial services to previously excluded populations new industry that attracts investment, creates new jobs and builds revenue.
  • Reduction of risks of holding cash
  • Reducing inefficiencies such as travel
  • Motivation towards use of Mobile Money
  • Social Uses: People using mobile money to help one another during charity for example in Kenya, Kenyans for Kenya raised Kshs.500million in 1 month.
  • Financial Inclusion: People access financial services that can enable them securely save their money
  • Business Uses: Businesses become more efficient
  • Entrepreneurs Unleashed
  • Larger businesses serving the base of the pyramid.
  • Faster business growth hence more job creation

Factors that could hinder Nigerian Businesses from adapting Mobile Money

  • Lack of integration tools
  • Cumbersome Bank settlement
  • Need for adaptation of processes for approvals and reconciliation
  • Unreliable systems uptime
  • Mobile money for business not advertised aggressively enough

What could make mobile money for business more successful

  • Identify source and purpose of mobile payment.
  • Better integration mechanisms for automated clearing and transitions processing
  • Secure business integration processes
  • Easy transfer of mobile money to bank accounts


Certain key industries should be first in mobile money initiatives such as disbursements of funds to grassroots, microfinance loan repayment. The inefficient banking system provides opportunities for nonbanks.

Mobile bill and utility payments (USD 6 billion in 2015) are an attractive opportunity for MNOs to strengthen their market position, if they focus on B2C transactions.

As M-payments in Nigeria is bank-led, players should focus on top-ups and bill payment services in the next two years. They should then extend their focus on domestic P2P remittances, which are expected to amount to the lion’s share of transactions by 2012, and will reach 1.5 billion in 2015.

Non-banks should consider investing in the banking sector in order to be involved in strategic decisions.


About Gathihu

Kariuki Gathitu is a young Techprenuer, Systems Architect and Software developer. He  builds financial systems and he is crazy about music. Crazy about Africa’s potential to lead the world. He is the founder of Zegetech and also blog his brain at