There is a case study on Safaricom that supports my viewpoint – that first one must consider the operating environment pragmatically prior to design and delivery of services for low income markets for a successful outcome that then drives the transformation of both the customer base and the corporation, giving rise to new ecosystems and platforms, as the case may be, based on the product/service offering’s characteristics.
This case study investigates the phenomenal development of M-PESA in Kenya, the world’s most successful mobile phone-based financial service, and the way it transformed its parent company, Safaricom from being an incumbent telecommunications operator to also becoming a digital platform working across different industries and sectors through an extensive business ecosystem.
Safaricom’s path to becoming a more inclusive business refining its focus on social impact was a consequence of its initial business activities rather than the reverse. I do not believe it could have been as successful it it had begun from the viewpoint of attempting social impact from inception of the service design. In the past I have written about the ecosystem within which Mpesa operates (Bhan, 2013)
Some systems thinking
That is, for any solution designed to enable the flow of wealth – mobile money transfer for example – or improve wealth creation at the BoP – it was not enough to simply target the poor alone. It would not work as a “Solution for the BoP” primarily because the BoP do not have any liquidity, even if they do indeed have assets especially in rural areas, or they do not have the cash for it to flow through the system in the first place. Thus solutions aimed at improving economic activity for the poor needed ‘non poor’ actors in the ecosystem in order to inject cash into the system and thus make it flow (and one hopes, grow).
Taking this thought one step further, MPesa – assessed as a holistic ecosystem for financial transactions – has been so very obviously successful in the Kenyan context primarily because it is used by everyone, regardless of their economic standing or bankedness (if I may coin a non word). In fact I believe that the number of banked actually surpasses the number of the unbanked – there is a link there that right now is not in the scope of this post but we can look at it later.
And thus, when ‘Solutions on the mobile to help the BoP or poor’ are considered, they should be looked at in terms of the complete ecosystem including the critical question of Where will the money come from into the system in the first place? Without which, they will limp along as a cash poor system with little wealth to circulate, achieving nothing for the BoP in question. Look at this article on MPesa repositioning itself in South Africa towards higher income brackets and away from the original target audience of poor rural women. QED.
That is, had Safaricom taken the social impact for the poor approach at the outset, it would have focused on the poor in Kenya, particularly the rural poor, the way Mpesa in South Africa did. And, as a mobile money transfer platform, if there were no targeted users having the money to add into the system, there wouldn’t be any cash flowing in that system, which is what keeps MPesa alive in Kenya (some estimates put the value of money circulating in MPesa as high as 50% of Kenya’s GDP).
It was because Mpesa was originally designed as a general purpose payment mechanism – regardless of the relative wealth or poverty of the target audience – that it was adopted by users across Kenya’s demographic spectrum, thus ensuring its eventual success.
The South African version targeted only poor rural women, who have no money in the first place to plug into the system thus it limped along unable to achieve a critical mass of user adoption and value circulating in the system for scale or sustainability.
This post serves as a footnote for the previous one introducing my perspective.