Making it Easier to Give and to Receive

(Triple Jump Advisory Services has been helping microfinance institutions -MFIs- in Kenya develop mobile banking channels since 2009.)

JANUARY 2012 - In response to the severe drought in East Africa, Kenyans used their mobile phones (and other means) to donate more than 677 million Ksh (USD 7.9 million) in little more than four weeks to the Kenyan Red Cross.

This outpouring of concern came as a surprise to the organizers of the Kenyans for Kenya initiative whose original aim was to collect 500 million Ksh. With these donations, the Red Cross was able to bring much needed food, water and supplies to the victims of the drought in northern Kenya. The Kenyan press ran articles about the solidarity and the unity of the Kenyan people -- and that people had plenty to contribute without having to rely entirely on international aid.

Kenyans have been using M-Pesa since its launch in 2007 to transfer money to one another but this was an unprecedented event where M-Pesa was used for collective action. The initiative was created by the Red Cross, Safaricom and Kenya Commercial Bank and used a variety of social platforms to spread the word and mobilize donations. The fact that users could conveniently send money from their M-Pesa account – and there are around 14 million M-Pesa subscribers in Kenya – to send donations starting at 10 Ksh (11 cents), and for free, meant that anyone who wanted to contribute could do so quickly, cheaply and privately -- and at any time of the day or night.

What happened in Kenya during summer 2011 isn’t revolutionary – donations have been made via mobile phone for several years now. After the Haiti earthquake in 2010, for example, more than 3 million people donated USD10 each to the American Red Cross by sending a text message. It does show, however, how m-banking channels are changing how individuals and organizations can respond to crises by making it easier to give and to receive. International relief NGOs, for example, are now using m-banking channels to give cash grants to people affected by crises: in Somalia, donors are sending money via mobile phones (and through hawallah traders) to famine victims who are unreachable by normal means because they live in areas controlled by the Shabaab. Since the relief organizations can’t directly provide food and emergency supplies, they give people the money to buy their own food and make sure, on the other side, that markets in the border areas that the grant recipients can reach have plenty of food stocks. Giving cash by mobile phone also has the advantage of being discreet for the recipients – not to mention, giving them the choice of how they spend the money -- and ensures that everyone gets their share, unlike what can happen at food distribution points.

Kenya has been leading the way on m-banking and it’s the fact that so many people are registered to M-Pesa and other m-banking platforms that made the Kenyans for Kenya initiative so successful. As adoption in other countries increases, we can expect to see many more generalized collective responses to help crisis victims cope, allowing individuals to make their contribution, no matter how small.