The potential for emerging and frontier markets to realize accelerated economic growth as a result of new technology transfer comes up regularly in our research findings. We have been increasingly excited about a new development – the capacity for new technology, particularly related to data over the Internet, to completely bypass swathes of older technology and business activity. We think this could lead to even more dramatic economic progress. In effect, the emerging markets are leapfrogging over the old technology and taking advantage of the newest technology today.
One example is the phenomenon of Kenya’s mobile money transfer system, large in scale and with growing potential. A mobile network operator launched the service to meet the needs of the large number of Kenyans without bank accounts to have a secure means of remitting funds to their families using the advertising slogan “Send Money Home.” Unexpectedly, the service grew like wildfire among the population and as of March 2012, transactions sent through the M-PESA (the Swahili word for money) represented about 25% of Kenya’s GDP. 1 As a result of that success, the system has spread rapidly to many other countries in Africa, Asia and even Europe where geography or the security situation renders money transfers over long distances problematic. In the meantime, in Kenya (and elsewhere) the easy-to-use service has produced an explosion of additional activities in commerce, savings and loans. Such transactions involved well over half the country’s population (as of March 2012). 2 Similar operations are also becoming established separately in other countries. Banks are getting involved since they now realize that the need for an expensive system of physical branches is not as critical.
Mark Mobius: Reaching New Consumers in New Ways