Photo by Suzanne Gell.Suzie Lonie stayed in Kenya for three years to build M-PESA from the ground up.

A Briton abroad became Mama M-PESA. She listened, built the mobile payment service and millions came.

Susie Lonie was trying to be inconspicuous, and wasn’t succeeding. Tall, blonde, and sounding very Scottish, there was no way to blend in at the downtown Nairobi market with a backpack full of cellphones. She headed towards the next micro-loan repayment meeting on her rounds. After that, talking to the sales team, pilot M-PESA outlets nearby and MicroSave, an advisory group.

She arrived in Kenya for a `little business trip’ in March 2005. Just to sort out a little project in three months. Nothing like her usual job of running the Vodafone mobile commerce platforms in the UK.

Lonie`s Kenyan stint started in 2004 when Nick Hughes asked her to bounce a few ideas around. Hughes was head of corporate social responsibility at Vodafone UK. The two of them put together a bid to improve efficiency in micro-finance institutions in East Africa. Next thing, they`d been awarded a million pounds by the UK Department of International Development.

So Hughes asked Lonie to go out to Kenya and set up a small pilot project. He wasn`t too sure how it would work or what it would do, she says, but reckoned she would figure it out when she got there. “Great! What could be as nice as three months in Kenya?” she thought. So she went.

The little pilot, a `toy M-PESA’ on Safaricom`s network, was very hard work, says Lonie.  (Safaricom is the Vodafone partner in Kenya.) Small-scale, very simplistic, just 500 customers recruited through micro finance institutions (MFIs). Sixteen outlets overall, most in Nairobi with a few in Fika, a small market town about an hour outside the capital. Everything done on the cheap, she says, to see if they were onto something.

Micro-loan groups met every week and Lonie visited them, chatting to people, hearing what they had to say. The MFIs struggled a bit to integrate M-PESA into their systems. Most have their own way of doing things, Lonie says, and some are more computer-savvy than others.

The obvious next step was to send people money, using `toy M-PESA’. Lonie built money transfer into the pilot, expecting customers to be wary. But Kenyans had been informally paying each other with cellphone airtime already. At first, people would send one small amount, phone the receiver and ask if they had drawn the money at an M-PESA outlet. After two or three transfers, they would assume M-PESA could be trusted, like Safaricom airtime transfers.

Ecash in Kenya

Lonie`s end customers, the micro-loan holders, loved it. They were vegetable sellers on the side of the road, bakers, guys with a few cows who sell milk to a dairy. In Kenya, when you take out a micro-loan, you`re guaranteed by the rest of your group.

“So if I default on my loan, everyone else in the group will pay my loan repayment for that week. And then they`ll come round and persuade me to pay them back,” says Lonie.

People were very comfortable with what they were doing.

“I think that`s important, especially when it`s their money,” says Lonie.

She had designed the service to ensure each transaction is very similar to the others. Paying a bill is not so different from sending money, she says. From there, says Lonie, putting money into a savings account was not a very big step.

Customer-friendly service was extended to include a M-PESA call centre which could intervene on behalf of customers harassed by service providers about to cut off service.

If the water bill was paid with M-PESA but the provider still wanted to cut off the water the next day, the customer could phone a free M-PESA helpline to intervene on their behalf.

Nowadays, M-PESA is big business.

“According to November 2009 figures, M-PESA serves a growing clientele in excess of 8.5 million subscribers through an agency network estimated at over 14 700, that has handled over Sh300 billion in person-to-person transfers since launch,” stated a Safaricom press release in January this year.

M-PESA Kenya has users all over the country, with customers paying school fees and electricity bills from their cellphones. As Lonie says: “People are not slow to catch onto a good idea that can help them out.”

Mealie meal with e-money

Lonie is now executive head of department, Vodacom Financial Services, based in Midrand. Vodacom and Nedbank launched M-PESA in South Africa on 31 August.

“If you`re buying your mealie meal from your local store every week,” says Lonie, “you will not want to withdraw cash with which to pay the store owner. Rather, you will very quickly persuade him by offering to send some e-money. A store owner can make his own decisions about accepting R30 in e-money as payment for a customer`s weekly groceries, and avoid cash hassles.”

Persuasive buyers can reduce their M-PESA cost of purchase from R6 to R2.45 this way, since it is cheaper to transfer e-money to another cellphone than to cash out at an M-PESA outlet.

It will take about a year, much like it did informally in Kenya, says Lonie, for M-PESA customers to start using e-money rather than cash.

In Kenya, one-man-band businesses accept M-PESA payment, and wholesalers are happy to sell trading stock to small vendors paying the same way. Lonie doesn`t pay Kenyan taxis in cash when she is there. They all take the e-money Lonie built.