Mpesa: the costs of evolving an independent central bank

We started this post before a Greek deal rendered the discussion of a digital parallel currency moot. Nevertheless, it’s still worth looking to the Kenyan M-pesa for a better understanding of why it’s dangerous to treat fintech solutions as panaceas for economies struggling with productivity, poor credit profiles, tax collection issues and overall corruption without understanding what’s really at stake.

Kenya is often presented as an example of a country which has flourished thanks to mobile money adoption — the poster child that “digital payments can make the world a better place”.

But often forgotten is Kenya’s unique circumstances. The M-pesa mobile money system, owned and operated by Safaricom which is 40 per cent owned by Vodafone, was allowed an unchallenged monopoly in the country for a very long time.