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Kenya: M-Pesa miracle

"One way that someone could make money in this country is to import real football shirts," says Eddie, Euromoney’s entrepreneurial driver in Nairobi. Euromoney’s slightly blank look in return prompts him to explain further. "I love football, we all love football and people want the shirts," he points to a man across the street wearing the Manchester City shirt of Carlos Tevez. The man is walking underneath a Samsung billboard showing a series of Chelsea players surrounding Samsung’s latest TV. "Even those in the rural areas will spend their money on them – and now they have more money than before to spend."

However, new-found wealth in the rural areas isn’t the result of robust growth in Kenya – on the contrary, Kenya grew only 1.7% in 2008, down from 7.1% in 2007. Instead, this new lease of money is mostly the result of a more efficient money transfer system in the form of M-Pesa. With nine million customers signed up, the M-Pesa product is a life-changing phenomenon for rural Kenyans.

M-Pesa was the brainchild of Vodafone, a shareholder in Safaricom, after the company noticed a gap in the money transfer market. Through the M-Pesa software, which is embedded on Safaricom SIM cards, customers can transfer money from mobile accounts on their phone handsets for others to access.

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