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The Economist recently spotlighted Kenya’s mobile money system, M-PESA. One can imagine European readers imagining what all the fuss is about. M-PESA allows users to transfer money over their phones. The system is crude in the sense of not using fancy apps or cutting edge proprietary software. But its efficiency is beyond doubt: Kenya is the world leader in this domain, far outstripping other countries with glitzier start up cultures, more technological knowhow, and better infrastructure.
For Europe, this should be a teachable moment. As the Economist notes, it’s easier to pay for a cab ride using your phone in Nairobi than it is in New York. This is very counterintuive to the European mindset. In more advanced societies things should be easier.
Europeans are having a tough enough time keeping pace with Amerian innovation and Asian transfer of wealth. There should be innovation hotspots sprouting up all over Europe tackling specifically European problems. M-PESA shows us what happens when innovators bootstrap solutions to home grown problems.
Conventional indicators don’t really account for this kind of innovation. M-PESA is part of the fabric of Kenya’s culture. It’s currently used by 17 million Kenyans and has experienced uninterrupted growth since its 2007 launch. The model works not only for the scale and culture of Kenya. Since the problems are similar, M-PESA is successfully being exported to India and other emerging markets in which money transfer options are few. Safaricom, the Kenyan mobile-network operator behind M-PESA, stands to profit hugely in this market expansion.
The scenario of new technological regimes actually constraining innovation is surprising. We are still so dazzled by new smartphone platforms and upgraded new models with their high octane publicity roll outs. So Europeans enthralled with Apple and Google need to recognize that the heart of innovation is problem-solving, pure and simple.