This article provides a glimpse into how pay-as-you-go voice, data and SMS access to mobile networks (known simply as ‘mobile air-time’) in East Africa spontaneously emerged as a currency and later inspired a mobile money service revolution – with support of governments and key private sector players (including FinTech companies like PayPal and WeChat). The spontaneous emergence of mobile credit as a currency follows the so-called Mengerian view that money need not come about by fiat (by government decree). I developed this argument in a previous article recently – using the examples of cigarette and Red Cross food parcel commodity money traded among Allied soldiers in a Germany-controlled Prisoner of War camp during World War II.1

Mobile phones are widely used throughout Africa2, and for the most part, the continent skipped usage of land lines. In fact, by 2015, Sub-Saharan Africa surpassed the amount of mobile phone subscriptions (84 per 100 people) that the United States had reached in 2007 (82 per 100 people).

According to the GSMA (Global System for Mobile Communications) – an organization representing mobile operators worldwide – Sub-Saharan Africa hosts about two-thirds the total value of global mobile money transactions and almost half of the total global mobile money registered accounts. Although Africa’s mobile money usage was more concentrated in Eastern Africa a decade ago, by 2018, mobile money usage became more widely adopted throughout Africa – leaving Eastern Africa with only about 59% total representation across the continent – down from almost 97% in 2010.

Mpesa 2



In 2001, what began as a telecommunications research project, eventually caught the attention of economists. Researchers partnered with the Commonwealth Telecommunications Organisation (CTO) began investigating mobile phone usage in Botswana, Ghana, and Uganda. A later researcher summarised the findings as follows:

“In three different countries, people described how they were using airtime as a virtual currency. They would purchase a ticket in, say, the capital city, and text the code to their upcountry relatives. The relatives could choose to either put the code on their phone and gain airtime or sell the airtime on to friends or merchants. This spontaneous use of airtime as a currency, with no outside or external civil society influence, suggested to us a huge pent-up demand for financial services, particularly the transfer of money within the country”.3



In 2007 – six years after the researchers had first noticed the practice of mobile air-time being used as a currency – Safaricom and Vodafone launched M-PESA in Kenya as a way of offering money transfer services to the unbanked. The service allowed users to create free accounts, to deposit and withdraw money at authorised distribution outlets without using the formal banking system. Safaricom framed the service “as a virtual bank, where you can pass the day without carrying cash, credit cards or debit cards by paying for everything, including consumer goods with the e-cash stored on your mobile phone”.

Today, M-PESA competes against the likes of other mobile money providers such as MTN Mobile Money and Orange Money. Mobile money providers from the various parts of the world are now collaborating with one another and with regulators so that African customers of, say, M-PESA, are now able to send money to users around the world thanks to FinTech companies like PayPal (USA-based) and WeChat (China-based). All this, of course, contributes to bringing the global economy closer to Africa and vice-versa.

Mobile money’s social value:

As for M-PESA’s social value, two researchers argued in a 2011 study that “Users say it is faster, cheaper, more reliable, and safer, and a very large majority report that they would suffer significant negative consequences if it were to be shut down”. Many users even use M-PESA effectively as a savings account.

Mats Granryd, GSMA’s Director General, explains how mobile money is “becoming the main path to financial inclusion in most low-income countries – including markets where a significant proportion of [the] population are [sic] financially excluded”. Phumzile Mlambo-Ngcuka, Executive Director of UN Women, argues that mobile money also empowers women: allowing them to pay their children’s school fees, to save, and access credit. For these reasons and others, mobile money phenomenon has since received praise from the likes of the World Economic Forum, World Bank, and United Nations.


Although Africa’s mobile money phenomenon may not offer the same level of permissionless access that bitcoin can offer – not to mention bitcoin’s decentralized ledger, distributed model, nor its pseudo-anonymity (which can be especially empowering when living under corrupt governments) – it still stands as a wonderful working model, with over a billion accounts – both inside and outside the African continent. The widespread trading of mobile air-time credit as a currency in East Africa in the early 2000s serves as a fascinating account of privately-issued digital currency before bitcoin and also supports the thesis of 19th century economist Carl Menger regarding money’s capability of spontaneously emerging “as the result of economic relationships that were independent of the power of the state”.4 But, perhaps most importantly, the practice of trading air-time credits later inspired something that was able to empower many millions of people (possibly billions) across Africa and beyond.5


1) I might have also included this phenomenon in my previous article on privately-issued digital currencies before bitcoin (as this certainly qualifies as one). Note: For simplicity, I use the words ‘currency’ and ‘money’ interchangeably.

2) With notable exceptions, such as Eritrea, which has even lower usage than North Korea.

3) Emphasis mine.

4) Menger (2011), pp. 261-262.

5 I am unaware if more than a billion people have used mobile money. All that the GSMA claims is that more than a billion mobile money accounts have been created, but obviously, one person is likely to be able to open more than one account – even if across more than one mobile operator.


  1. MENGER, C. (2011): Principles of Economics, Auburn, Ludwig von Mises Institute [Pocketbook edition].


Feature image picture credits: REUTERS/BOGDAN CRISTEL



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