What can we learn from M-Pesa?

One of the interesting technology revolutions that’s happened here in Kenya is mobile banking. M-Pesa, (M for mobile, and pesa means money in Swahili) is a service that you set up on your phone, enabling you to pay for things by text message. After topping up your M-Pesa account, you can easily pay friends, bills and shops by sending them a text message. You can even text the cash machine to withdraw money. It’s really easy.

It’s made me think about the opportunities for local currencies in the UK. I’m a big supporter of local currencies as they can help protect independent shops, enabling a more vibrant and diverse local economy, supporting a greater number of jobs and entrepreneurs. Sadly and rather embarrassingly,  despite my love of local currencies, I never used the Brixton Pound even when I lived so close to Brixton last year. I think this was for multiple reasons – partly laziness, but also a lack of it’s presence about the town.

Brixton Pound are now launching an e-banking service, allowing you to pay-by-text. If they get this right, it could open up an exciting new opportunity for them, as well as for other local currencies. Imagine being able to quickly pay in local currencies using your phone as you travel around the country. It could make local currencies much more easier to access and use. From a setting-up point of view, the e-banking system can easily be replicated and means Councils or groups setting up a local currency can allocate greater funds to marketing and town presence – something the Brixton Pound lacks.

Creating local currency bubbles is one way to keep money leaking out into un-trusty big banks, which according to NEF, are now taking £46 billion a year in subsidies from the tax payer, more than any other sector. One interesting thing that M-Pesa does in Kenya, is only allow one-way international transactions. This means that money can only be fed into M-Pesa from overseas and not the other way. This is a clever way to protect the currency in Kenya but also M-Pesa itself (owned by Vodaphone and Safaricom). Perhaps local currencies in the UK should use a similar system to protect themselves?

I really hope local currencies expand and grow, I think it may be part of the picture for achieving prosperity without growth. But to work, I really think they need local councils fully on board and supporting them. One way to do this quickly, would be for Councils to start paying a percentage of their employee salaries in local currency. There’s certainly enough outlets accepting the Brixton Pound. I wonder if employees of Lambeth Council would be up for that?