The Transformation of East Africa’s Economy Using Mobile Phone Money Transfer Services

Abstract

This article utilizes a combination of popular literature and scholarly sources to compare the mobile money transfer service experiences in Kenya and Uganda; two East African countries that are members of a revived regional common market ahead of a political federation by 2015. While different outcomes to the introduction of mobile money transfer services are highlighted about each country, similarities that are typical of developing countries with their populations struggling to cope with the various uses of New Information and Communication Technologies (NICTs) are also underlined. The article underscores the transformation of the social and economic lives of the people of East Africa by mobile money transfer services, especially in the rural areas where formal banking services have been largely absent. In the wake of the cut-throat competition among the telecom companies to fill the banking void in the rural areas of East Africa and to tap into the lucrative international business of foreign currency remittance by East Africans in the diaspora, the local populations have become the unintended beneficiaries of Information and Communication (ICT) innovations. In this essay, Kenya and Uganda’s mobile money transfer service experiences are juxtaposed along five dimensions: a brief history of the service, political, economic and socio-cultural contexts, as well as evaluation and user perceptions of the services. It is argued that one way to further consolidate analysis of the ongoing radical economic make-over of rural East Africa is to engage existing communication technology theories. An example of two complementary communication technology theories, diffusion of innovations and the dual capacity model, that can be used to inform and explain some of the outcomes is provided.