Banking The Unbanked? How I Taught A Total Stranger In Kenya About Bitcoin

M-Pesa dominates payments in Kenya — so does Bitcoin have any relevance to the country's citizens at all?

by Steven Msoh 10 min April 1, 2020
Banking the Unbanked Bitcoin In Kenya
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Deep inside the Great Rift Valley in Kenya lies the town of Nakuru, renowned for its flamingos and prehistoric sites. Located a hundred miles northwest of Nairobi, the town’s name translates to ‘Dusty Place’ in the local Maasai language.

It was here that I decided to educate random strangers about Bitcoin, a term strange to many who are accustomed to using cash and mobile payment system M-Pesa to settle their transactions.

M-Pesa is by far the largest mobile money system in Kenya, used by approximately 83% of adults. As the COVID-19 epidemic reaches the country, the Central Bank of Kenya has given citizens even more reason to use the product.

It would have been easy to find a few young people who might have heard a thing or two about Bitcoin. However, this demographic already has access to the internet and can easily search for Bitcoin on Google.

Instead, I decided to target older people, those that most mainstream media and education initiatives have ignored. It didn’t take me long to meet the first target – a group of bus drivers who were having a cup of coffee as they waited for their buses to fill up with passengers.

Twenty minutes in, the four drivers didn’t seem to know any more about Bitcoin than they did when I arrived. “Kwa hivyo Bitcoin ni kama M-Pesa (Is Bitcoin just like M-Pesa?)” one asked me. So far, they had understood Bitcoin to either be a form of stock or an M-Pesa alternative.

After a few more dozen questions, the four drivers seemed to have a rudimentary understanding of Bitcoin as a digital currency. By now, a few more had joined, all with questions on why they should bother using Bitcoin. I answered the questions, and then answered them again, and again. By the end of it all, I had managed to convince three people to open a Bitcoin wallet, after which I sent them a few dollars’ worth of Bitcoin. I also taught the new crypto disciples how to buy Bitcoin on their own from peer-to-peer platforms.

Are you certain it’s not a scam?

By now, I was feeling quite confident and decided to kick it up a notch. I approached my next target – a group of mama mbogas (vegetable vendors). As with the previous group, the questions were plentiful; why use Bitcoin? Does it replace M-Pesa? Is it a scam? Are you certain it’s not a scam?

I understood their apprehension. In Kenya, thousands of people have lost millions of dollars to Bitcoin-related scams. Just recently, a local cryptocurrency startup Nurucoin shut down, with the founder allegedly fleeing to California. Nurucoin, which touted itself as the ultimate pan-African cryptocurrency, purportedly made off with Kshs. 2.7 billion ($27 million). And this wasn’t the only scam; dozens of others have defrauded gullible investors, eroding faith in Bitcoin.

One of the vendors explained “I’ve heard of Bitcoin, but it was as a scam. One of my neighbors lost Kshs. 64,000 ($640) to a scam known as Velox. She had been told that she could make lots of money very quickly. But they closed and vanished overnight. That’s why I want nothing to do with Bitcoin.” (Translated from Swahili.)

She was referring to Velox 10 Global, a company that launched in Kenya in 2017. Founded by a Brazilian national, the company promised up to 50% monthly returns — but ended up making off with millions of dollars’ worth of investors’ money.

There was also one constant issue many cited as the reason for their apprehension – Bitcoin’s speed. As a speculative asset Bitcoin’s need for speed is minimal: but its efficiency as a transactional currency becomes a challenge. In Kenya, M-Pesa offers a convenient cashless payment method in three seconds. With Bitcoin taking at least ten minutes recently, its use for small day-to-day payments seems distant.

Despite the challenges, I managed to convince five vendors to open a Bitcoin wallet.

Bitcoin remittance

While Bitcoin may be slower than some of the payment methods available, including M-Pesa and Visa, it is certainly faster than the available cross-border funds transfer methods, and so this is what I decided to focus on. Luckily, one of the vendors had a relative in Ghana and I decided to discuss Bitcoin’s cross-border funds transfer capabilities.

The vendor, Jane Wangui, is a vegetable seller who also doubles up as a salonist. A mother of six, Wangui is no stranger to the internet and uses her smartphone to communicate with her clients on WhatsApp. Her sister has been living in Ghana for the past eight years. In that time, they have had to rely on the bank for funds transfers, with her sister sending money to support their mother.

As has been well documented, including by the World Bank, remittance costs in Africa are the highest in the world. How expensive? It costs you $14 to send $100 to Ghana from Nairobi through Standard Chartered Bank. Equity Bank, Kenya’s largest bank by customers charges $18 for a similar amount, with KCB Bank costing $24. These high costs have proven prohibitive for many, but the options have been few.

Jane Wangui’s salon

Wangui was about to learn a much cheaper, faster and more convenient funds transfer method. I helped her download a Bitcoin wallet, Paxful in this case, which has a presence in both countries. The app has a simple user interface, making it easy to send and receive Bitcoin.

Instead of sending the BTC to Wangui, I decided to help her buy from other traders. The Paxful app redirects you to the website which has hundreds of traders ready to sell. We settled on a trader who had great reviews and a fair price, sent the fiat through M-Pesa and in a few minutes, we had our $100 worth of Bitcoin.

The next step was contacting Wangui’s sister in Ghana. In a few minutes, she had set up her Bitcoin wallet. We sent the $100 worth of Bitcoin to her, costing us $2.10; just over one-seventh what the cheapest bank would charge. It also just took us 45 minutes to buy the Bitcoin and send it to Ghana.

The recipient in Ghana had the option of either cashing out the BTC and receiving the fiat equivalent or holding it for speculation. Wangui had learned that Bitcoin’s price can appreciate with time, and she advised her sister to hodl for a few weeks and see if she could make a few extra bucks. However, to complete the remittance process, I urged her to sell part of her BTC for Ghanaian cedi.

Wangui, who had been a lifelong member of Equity Bank (which charges $18 for a similar transaction) vowed to always use Bitcoin for such transactions moving forward.

One woman’s valiant efforts

That day, I managed to reach out to around 30 people in Nakuru town, with over half opening Bitcoin wallets and getting started with their crypto journey. While my efforts in crypto education only stretched so far, one woman in Kenya has been doing much more, with her efforts gaining her national recognition.

Betty Wanjiru is a restaurateur located in Nyeri, a town 94 miles north of Nairobi. She discovered Bitcoin years ago in a networking group. However, it came at a cost, with a prior Bitcoin-related multi-level marketing scam seeing her lose Kshs. 550,000 ($5,500). She didn’t give up on Bitcoin, however, and she started looking up online for information on the digital currency.

Betty Wanjiru and Steven Nsoh at Betty’s Place

She lived in Nairobi then but later moved to Nyeri where she opened her restaurant, Betty’s Place. Her love for Bitcoin continued and she used her new establishment to spread the gospel, teaching the locals on what Bitcoin is, how to buy it, what you can do with it and more. She became one of the first merchants in Kenya to accept Bitcoin payments. She now accepts Dash as well.

When she started, very few people in Kenya knew about digital currencies, she told me when I paid her a visit. So when she put up ‘Bitcoin Accepted Here’ signs in her restaurant, her clients had plenty of questions — some of them amusing. “Is this Bitcoin one of those exotic dishes from abroad?” one of her clients once asked her.

Betty soldiered on, teaching both tech-savvy young people and the elderly about Bitcoin. To the local community, she became their teacher and source of truth for everything Bitcoin. They consulted her on which companies to invest in, which wallets were safest, how much money to invest in Bitcoin, when to sell.

Her efforts have earned her national recognition as Bitcoin’s popularity has soared in the country, making her the poster child for Bitcoin adoption. As she told me, she has stepped up her efforts and she has now partnered with a few experienced traders to train young people on how they can make a living trading Bitcoin.

Does M-Pesa derail Bitcoin adoption?

In my education efforts, one question has been posed more than any other: why use Bitcoin when I have M-Pesa? For many day-to-day users, factors such as independence from government control, enhanced security, and privacy simply aren’t enough to abandon the convenience of M-Pesa for Bitcoin.

I asked Betty if she has found M-Pesa to be a deterrent to the adoption of Bitcoin.

“Not at all. I think that having M-Pesa puts us at an advantage as a country. It’s easier to comprehend the concept of digital money,” she tells me. “All we need to make our people understand is that Bitcoin serves their needs better than M-Pesa does. Their money is more secure with Bitcoin; they can send money abroad at low charges and factors like these.”

Paxful, a Bitcoin wallet targeting African markets, reinforces Betty’s view. The country’s innovative payment system not only makes peer-to-peer trading instant and convenient, a company spokesperson told me. They also revealed that remittance is one of the greatest uses it has seen for Bitcoin on its platform.

When it comes to educating Kenyans about Bitcoin, Paxful has been on the frontline. It has organized several campus outreach events, educating thousands of university students across the country about Bitcoin, some of them for the first time. The attendants also get to download the Paxful wallet on their phones, after which they received some Bitcoins to familiarize themselves with the digital currency.

“We made it our mission to launch a drive to educate people about the true use cases of Bitcoin and peer-to-peer finance. These workshops highlight how to avoid falling prey to bad actors in the crypto-space and counter the over-emphasis on Bitcoin speculation. Each attendee of the workshop also received free Bitcoin to start them on their journey,” the spokesperson told me.

A bright future for Bitcoin

Kenya has always been a leader in the technology sector in Africa. Bitcoin adoption hasn’t been any different, with Paxful revealing, “We have seen steady growth in Africa, with Nigeria, Kenya, South Africa and Ghana leading. Africa has many of the world’s unbanked people, fortunately, Bitcoin provides a new way for them to access the global financial system.”

The country has continued to provide a fertile ground for the growth of Bitcoin. This has been despite the negative press coverage in the country, with mainstream media branding it a scam. The numerous Bitcoin-related schemes have only made it worse. The government has done little to boost adoption, with the central bank governor warning Kenyans against the use of Bitcoin.

And yet despite this, new adopters like Wangui prove that Bitcoin still has a big role to play. As Betty told me:

“Kenyans love new technology and once the government stops opposing Bitcoin, and more people learn about its benefits, adoption in Kenya will take off. Kenya will become a leader in Africa when it comes to Bitcoin.”

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Steven Msoh

Steven Msoh

Steven has been covering blockchain and cryptocurrency adoption in Africa for years, driven by the vision of a more prosperous Africa, where technology finally spurs the growth of the continent.