MIT researcher Nathan Eagle regaled the audience at the O’Reilly Emerging Technology conference yesterday with tales of technical innovation from East Africa. “Kenya has some mobile phone services that are years ahead of what we have right now,” he said. Eagle was at ETech to present his new startup, Txteagle, which aims to be a kind of mobile Mechanical Turk, using countless mobile phone users in Kenya and beyond to solve easy tasks and earn small amounts of money in return. (There’s a good writeup in Wired News today)
It’s definitely an interesting idea. But to me, the real story is how mobile phones have transformed a country like Kenya in recent years, making not only services like Txteagle possible, but also shaking up the region’s entire economic system.
Eagle spent the last few years going back and forth between Kenya and the U.S., and he witnessed this transformation firsthand. I caught up with him after his talk to learn more. According to Eagle, local incumbent Safaricom had started a minute-sharing service for its prepaid cell phone plans a few years back. The idea was to enable users to send minutes to family members in rural areas, who weren’t otherwise able to buy prepaid phone cards. However, Kenyans quickly came up with other uses. “Lots and lots of people were using it as a surrogate for currency,” Eagle said. “[You] could literally pay for taxi cab rides using cell phone credit.”
Safaricom realized a huge opportunity and started a mobile payment service called M-PESA. To call M-PESA a success would be an understatement, according to Eagle. “Within about a year, (Safaricom) became the biggest bank in East Africa.” Today you can use your phone to pay for cab rides and electricity, to get money out of ATMs without owning an ATM card or even having a traditional bank account.
Eagle shared another striking example of the transformative power of mobile payments during his ETech talk. Rural communities used to have to pay a lot of money upfront in order to get a modern well capable of providing clean drinking water. Now, there are companies that install these wells for free, complete with an integrated cell phone payment system. Want some water? Just pay as you go with your M-PESA account.
“It has transformed the country,” says Eagle