Leapfrogging: Mobile Money in Kenya

In many developing countries, landline networks were limited, so people adopted mobile phones without ever having a landline, a process called leapfrogging. Kenya offers a famous example. In March 2007 the mobile operator Safaricom launched M-Pesa, which lets users store and send money by text message, cashing in and out at local agents. It spread rapidly because many Kenyans lacked bank accounts but had phones, and because urban workers wanted to send money to relatives in rural areas.

A 2016 study in the journal Science by economists Tavneet Suri and William Jack estimated that access to M-Pesa lifted about 2% of Kenyan households out of extreme poverty, with especially strong effects for households headed by women. Mobile money spread to other countries, though with mixed success. Critics raise concerns about fees, data privacy and dependence on a single company. The case shows how technology can be adapted to local needs.