The evolution of Kenya's financial infrastructure has been inspired to meet the needs of the country’s philanthropy; from the days of money orders, M-PESA to international remittances.

According to Kenya National Bureau of Statistics (KNBS) 33.5 per cent of the households survive on cash transfers that is three out of every ten Kenyans depend on their relatives for incomes.

The KNBS household survey indicates that recipients of cash transfers are mostly rural (40.2 per cent) and the money was mostly sent to mothers who mainly used the money on education and food.

The survey also showed how the money is transmitted; majority (43.7 per cent) of households received cash transfers through mobile money transfer while 39.8 per cent sent money through relatives.

 This shows the force behind the evolution of M-PESA.

Sending money to family was a laborious process that took so long, the main mode of transferring cash was through a relative which would have to wait for the convenience of when a relative would travel.

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In emergency cases, money orders were sent but even these had a problem at the last mile since most rural areas were distant from towns and trading centers that had Posta or a financial institution.

M-PESA came in to arrest this, making it cheaper, faster and more effective to give directly to our dependents.

Dr David Ferrand, Financial Sector Deepening (FSD) Kenya’s director from 2005 till June 2019 gave a lecture in November 2019 where he pointed out the origins of M-PESA as a support framework to enable Kenyans support their families, a financial system focused on solving real-world problems.

“M-PESA started off by innovating solutions to problems facing their customers. For M-PESA, it was initially to enable Kenyans working away from their families, typically in urban areas, to get money back to support their relatives in the rural areas,” he said.

The mobile money revolution then leveraged a fast-spreading mobile telephone communications network to develop a low-cost payments solution that quickly went viral with nearly 8 in 10 adults owning a mobile money account in just over a decade since its inception.

FSD in the 2019 Annual report notes that since then, aside from in-country remittances, digital payments are beginning to make in-roads into key transaction use cases such as paying monthly bills, receiving salaries, paying school fees and paying money to government through formal accounts rather than cash.

However, digital transactions have not yet fully penetrated the ‘daily economy’; where payments for goods and services are still largely in cash.