Michael Joseph, a former CEO of Safaricom, has shared details regarding the history of the telco's well-known mobile payment system M-Pesa.
While serving as the Head of Social Enterprise at Vodafone, which controlled 40% of Safaricom, in 2003, Nick Hughes, the co-founder of asset finance platform M-KOPA, created M-pesa, according to Joseph, who made this claim during a business gathering in Nairobi.
"There are numerous MPESA fathers and moms, and I personally refer to M-Pesa as my mother. Nick Hughes, the man of M-KOPA, came up with the concept in 2006 "Joseph said.
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According to Joseph, Hughes filed a funding request to the UK Department for International Development to develop a product that would improve the distribution of microloans in Africa.
"Nick proposed that the microfinance sector utilize a product that could spread little loans and then allow borrowers to pay back those tiny loans when he filed for the award. He came up with the concept of using mobile phones to do this because managing and repaying loans in micro-firms is fairly expensive "Joseph remarked.
Other Vodafone companies did not test the prototype despite Hughes' best efforts to persuade them to do so. He went up to Joseph, the CEO of Safaricom at the time, since he had no one else to help him.
Because he wanted the company to be innovative, Joseph said, "He attempted to flood this to all Vodafone companies to test it elsewhere, but unhappily nobody wanted to do it. So they came to me, and I said okay; let's give it a try, and we tested it in Thika."
Users in the test market began utilizing the prototype to send money to one another even though it was to repay microloans.
Consequently, Joseph said, "We tested with the microfinance company, and it was a pure success, but what would happen was people would receive the money from the microfinance company but they also had a facility and manual structure that they could send that money to somebody else who was the real recipient."
The individuals using it felt great, so my team said, "Why don't we do more of this." At that point, we decided to alter the product to become M-Pesa.
However, Joseph's colleagues still needed to be convinced that he could sell the goods for a profit.
"They said that it was a complete waste of time, but I wasn't interested in profiting from it. I believed it would be a product that helped people improve their lives, leading to their continued loyalty to the business "He spoke.
