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Mobile Phone Banking Comes to South Africa. Will It Work?

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Matthew Clark/The Christian Science Monitor/File

(Read caption) A gentleman consults with a clerk at M-PESA in Nairobi, Kenya, in this Sept. 2007 file photo. Vodacom's M-Pesa mobile phone banking service is all the rage in Kenya, where in 3 years it jumped to 10 million customers in a country of 37 million.

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About half of South Africa’s citizens don’t have bank accounts. Nearly 40% are either unemployed or work informal jobs paid in cash. So how do they pay their bills? How do they send cash to relatives during an emergency?

Until recently, South Africa’s poor simply didn’t have any good banking choices. There are plenty of good banks here, but their charges are so high, and their regulations are so strict – such as proof of regular income – that many poor people simply stowed their cash in the mattress.

Now, thanks to mobile phone giant Vodacom, and its money transfer service M-Pesa, poorer South Africans may finally be able to set aside money, pay bills, and send cash. M-Pesa launched in Kenya in 2007, and quickly overtook traditional banks there by gaining 10 million users in a country of 37 million citizens. Now, thankfully for South Africa’s poor, it has come here as well.

The key to M-Pesa’s success, in Kenya and a growing number of countries, is the African love affair with the cell phone. Sometime this year, the continent will cross a threshold of mobile phone use, with one mobile phone for every African adult.

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