Bitcoin in Africa is a hot topic, and Kenya, with its mobile payment precedent, is no exception – so it is at first curious that coder Stephen Gornick begins an interview “At this point there is very little Bitcoin activity in Kenya.”
When asked whether the attention the country was getting was media hype, Gornick even agreed – “yes it’s hype because there’s not much going on.”
His words mark the opening of Bitcoin in Kenya, a documentary film released this week by IAmSatoshi and director Tomer Kantor. Far from continuing the buzz surrounding Africa’s Bitcoin progress, however, the film eyes the potential of Bitcoin in diversifying the current market, while noting the shortcomings of its main competitor, MPesa.
“There’s huge potential especially because of the traction MPesa already has which has given people the familiarity with using their mobile phones to store value and transfer money at a peer-to-peer level,” Gornick continues.
MPesa became an oft-touted name in the previous media coverage of the Kenyan Bitcoin story, gathering a fair measure of integrity along the way as a great facilitator of bank-free financial freedom for the masses.
However, at the time, a lot was left unsaid, and Kantor’s interviewees are quick to mention it.
Parent company Safaricom which operates MPesa has a monopoly on the market, and while this produces the benefits of having an agent on every corner and over 50% integration, some other aspects are less savory.
“I think one of the largest problems with Kenya’s financial system right now is MPesa – it’s too powerful,” Kipochi founder Pelle Braendgaard says. Kipochi is a wallet which uses a mobile phone number to send bitcoins internationally, and together with Kenya-centric BitPesa is attempting to corner the market for Bitcoin.
- Pelle Braendgaard, Kipochi founder
“They are now using their power as gatekeepers to let people in and onto their system,” he continues. “This is affecting a lot of start-ups in Kenya who try and pitch their ideas so they can use MPesa for their business, and often Safaricom will either not allow them to use it or come up with a competing service in a couple of months… it’s so powerful that it’s causing many different problems down here.”
Student Michael Mungai echoes the sentiment. “I was just hesitant about the monopoly that Safaricom is creating in Kenya, it seems like they are taking over everything and it’s not good for any country to be at the mercy of one industry.”
Fees for using the service are predictably high, with the cost of a 100-shilling transfer currently around 60 shillings of which the sender and recipient each pay half, a 60% commission which dwarfs even the likes of Western Union et al.
Limits of power
Gornick notes however that it is in Safaricom’s plans to make MPesa a business service that Bitcoin has an immediate broad advantage.
“You can’t run a business where there’s no paper trail and you don’t have any way to confirm whether money was sent or received; that system won’t work for middle or higher level businesses,” he says, while the film shows newspaper cuttings of cases where large amounts of MPesa cash have become lost in the ether.
BitPesa CEO Elizabeth Rossiello has a different take, noting that Kenya’s current system has no legacy for Bitcoin technology to overcome, unlike the West with its traditional banking system.
“Here in Kenya everything was done two years ago, so you’re not replacing a landline telephone, you’re straight to mobile phones; you’re not replacing an old-fashioned banking system, you’ll be the first banking system coming in,” she highlights.
Nonetheless, certain aspects of the status quo sound eerily like the same old story.
“Safaricom is still being negative in a lot of ways towards Bitcoin because it’s afraid of competition,” BitPesa’s Nhial Majok explains, “but I think it’s putting itself in a bad position… companies in the future are going to build infrastructure around Bitcoin because it’s an international gateway and an international payment mechanism.”
- Nhial Majok from BitPesa
For the future, it seems, it may only be a case of sitting back and watching while Safaricom gradually follows the example of eBay in the West with regard to Bitcoin. In the meantime, however, the scene is not quite as adventurous.
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G+Pinterest Bitcoin in Africa is a hot topic, and Kenya, with its mobile payment precedent , is no exception – so it is at first curious that coder Stephen Gornick begins an interview “At this point there is very little Bitcoin activity in Kenya.”When asked whether the attention the country was getting was media hype, Gornick even agreed – “yes it’s hype because there’s not much going on.”His words mark the opening of Bitcoin […]