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IESE Students Study the Successful Adoption of M-Pesa in Kenya

  Jan 15, 2015

Case studies form an integral part of the curriculum in Strathmore Business School (SBS). MBA Students from IESE Business School, a leading business school in Spain and the world had the opportunity to discuss a case study on M-Pesa at the SBS campus, Kenya. The students are in SBS as part of the Doing Business in Africa program which will see them stay in SBS for two weeks. The program is designed to provide participants with a unique exposure to the African continent by providing practical skills and knowledge required to successfully operate and grow a business in Africa.

Guided by Prof. Alejandro Lago, the IESE MBA Academic Director, the students analysed the case from three angles; context, concept, and execution. The runaway success of M-Pesa, they decided, resulted from the favourable interplay of the three factors in the market. This ensured that the market was in the right condition when the product was launched i.e. a poorly served currency transaction market, not burdened by legacy regulation, and complemented by an open and existent clientele, resulted in the immediate adoption of the product.

However, the success of M-Pesa in Kenya didn’t translate into similar outcomes in other African countries. Prof. Lago took the class through the factors that contributed to this failure. He used the case examples of Tanzania and South Africa, where the concept failed to work. In Tanzania, cultural hesitation, the lack of extensive agent networks and the fact that the product was considered to be foreign, impeded the process of adoption. In South Africa, on the other hand, the maturity of the market and preparedness of the banks served to kill the product the moment it was introduced.

He concluded by stating that the lack of legacy technology in African countries and unmet needs, combined with the openness of the economies, makes the African market very dynamic and capable of adopting innovations, especially in IT and communications, at very rapid rates. This, he explained, was the reason behind the development of Nairobi as the ‘Silicon Savannah’.

“In Africa, replicability of business models from one country to another is rarely possible,” he said. “Here, the concept of ‘one country, one approach’ holds. Success in one country doesn’t imply success in another.”

Each year, students come from other international business schools convene at Strathmore Business School to study the African economic environment as part of the Doing Business in Africa Program. In addition to the sit-in class sessions, the participants visit local industries, markets and neighbourhoods. This ensures that their learning process is well-rounded and interesting.

To learn more about the Doing Business in Africa Program, click here.

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