NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, November 6, 2014

Executive Summary: In 2007, M-Pesa started in Kenya as a CSR pilot project by Safaricom, a Vodafone subsidiary, to transfer money over mobile because it was unsafe to carry cash. But soon it changed into a financial service and became a big hit. Vodafone brought the platform to India in 2010 as a pilot in Rajasthan, and launched it in April 2013. But it has had a slow start considering only 1.5 million of Vodafone’s 170 million subscribers use this service. This case study looks at how a service that originated in Kenya was tweaked for India and whether it can succeed.

Geeta Devi, Choti Devi and Lilima Kachaap, three poor women in the nondescript area of Namkum near Ranchi, Jharkhand’s capital, had recently given birth to healthy offspring. But their joy was tempered by exasperation. Their wait for due money from Janani Suraksha Yojana (JSY), a financial assistance plan under the National Rural Health Mission (NRHM), was getting never-ending. The scheme, which promotes institutional delivery among poor women, gives Rs 1,400 on the birth of every child to the mother.

Thankfully, the trio would get their due unlike thousands of others who do not, and from quite an unexpected source. It all started when Vodafone, India’s second-largest mobile operator by subscriber base, tied up with NRHM to do a pilot project in Namkum. The objective: disburse money directly to the beneficiaries through M-Pesa – its financial mobile service better known as a mobile wallet. M-Pesa is a USSD-based (an SMS-based service that does not need Internet) technology that helps people send and receive money over the mobile, apart from making utility bill payments, and recharging mobile and DTH accounts.