July 07, 2021

Kenya is the birthplace of mobile money. In 2007, long before most of the world had even imagined mobile electronic payments, Safaricom introduced M-Pesa, enabling Kenyans to load money into their phones and use the phone to pay for things.

The rest is history. Spreading quickly throughout Kenya and far beyond, this innovation sparked a worldwide shift toward instant, mobile, affordable movement of money. And it helped inspire a whole generation of fintech innovators, who saw that cell phones were reaching nearly everyone in the world and could become, in effect, banking infrastructure. The phones were already in people’s hands. People already knew how to use them. The phone could carry additional services at incredibly low marginal costs. People who had little money, people for whom traditional banks were never going to build and staff a traditional branch, suddenly didn’t need one anymore. The world had changed.

My guest today, Sheila M’Mbijjewe, is the Deputy Governor of the Central Bank of Kenya and is helping lead the way to a new world of financial services and financial regulation.

In our conversation, she describes what it was like for the regulators who faced that cutting edge situation, new terrain that no one had navigated before them. They saw the powerful potential for full financial inclusion. She says there wasn’t much money spent on marketing M-Pesa -- that people just saw immediately what this tool was and they got phones and started using it, and the regulators had to figure out how to enable it, while also managing the risks it could bring. They didn’t have laws in place for it, but, as she says, they were shown a solution by the technology world, and so they watched, and learned, and collaborated to figure it out. Today, 83% of Kenyans are served by the formal financial system. Last year, half of Kenya’s GDP moved on the M-Pesa rails.

This kind of thinking has kept Kenya at the forefront of innovation. There is an enormous opportunity for emerging market regulators to “leapfrog” the legacy regulatory models of the large economies, because they are starting from something closer to a blank slate. Their consumer markets are mobile-first. Their regulatory methods are increasingly digital-first. They have substantially less legacy regulatory architecture that has to be overhauled to take advantage of digital technology. They have been, to a great extent, born digital. In today’s world, that’s an advantage.

And Kenya is leveraging it. In our conversation the Deputy Governor describes some of their international initiatives as a regional and global leader, and talks about their strategies for driving financial inclusion. She points, for example, to their success in leveraging efficient technology to enable a sharp rise in very small payments, under $10, as a growth driver for small businesses, and especially for women. Turning to the risk side of the coin, she talks about the many challenges the central bank faces as a regulator, ranging from financial crime, to privacy and security, to data governance, to gambling, to the role of big tech firms and their potential impacts on systemic stability. And she talks, of course, about the pandemic and its somewhat surprising trajectory in Africa.

When I ask how she sees the future of finance in Kenya, she notes that when she joined the central bank, the market was owned by three large foreign banks, with not one African CEO. Today it is 70% owned by five Kenyan banks, and all the CEOs, even at the international banks, are African. This happened in just 15 years.

We also talk about women. Deputy Governor M’Mbijjewe was one of the first group of qualified professional women coming out of Kenya, and one of just four chartered accountants who came back to Kenya after being educated abroad. Look at her biography below, and you will see the long list of breakthrough experiences in which she has been the first woman to do something or to lead something. I had previously had the chance to talk with her at the globalTechSprint on Women’s Economic Empowerment that AIR co-hosted last March with the UK Financial Conduct Authority, addressing the pandemic’s disproportionate impacts on the financial lives of women. (By the way, we are now planning a second women’s empowerment sprint for next year, focused on emerging markets -- be sure to watch for that!)

In today’s show, the Deputy Governor observes that half of Kenya’s population is female, but that they are the backbone of agriculture and much of the informal economy. Pointing out that women hold only one percent of global wealth, she observes that -- since women are not stupid -- there should be more equality. She shares her thoughts on structural issues that need to be overcome, and on the need to challenge inequality, a priority she shares with the Central Bank’s Governor, Patrick Njoroge.

And she has advice for women who aspire to a career path like hers. She says, “We must open the doors to let all the young ladies come through...I would urge young ladies to have the courage to step forward.”

I know you will feel inspired, as I have, by my conversation with Sheila M’Mbijjewe.

More on the Deputy Governor

Mrs. Sheila M’Mbijjewe is the Deputy Governor of the Central Bank of Kenya (CBK), and has  served in that role since June 19, 2015. She has helped to oversee a period of significant change in the Kenyan  financial sector, making it more resilient and responsive. She is part of the African leadership that analyses the financial landscape across the continent and helps guide policy and actions to mitigate volatility and enhance growth.

Sheila was a founding member of the Kenyan Monetary Policy Committee and its predecessor  institution, the Monetary Policy Advisory Committee. She was also a founding member of the  Crime and Anti-Money Laundering Act Advisory Committee, and served on the Board of the  Financial Reporting Centre.

Mrs. M’Mbijjewe was the first woman in Kenya to be appointed as an executive director of a  publicly listed commercial bank. She was also the first Kenyan woman to be appointed to the board of a large, international publicly quoted company. She has served as a director of the Capital Markets Authority, the Disclosure Committee of the Capital Markets in Kenya, and the  Information and Technology Committee of the Nairobi Stock Exchange. She was also on the board of Old Mutual Insurance Company in Kenya and Bamburi Cement, among others.

Mrs. M’Mbijjewe holds a Bachelor of Arts Degree in Accounts and Finance, and qualified as a  Chartered Accountant in England and Wales.

She was awarded the Order of Moran of the Burning Spear (MBS), in recognition of service to her country, and was appointed to a second term as Deputy Governor of the CBK in June 2019.

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Next up on Barefoot Innovation we will have Jesse Morris, CEO of Energy Web. AIR has partnered with Energy Web and the Rocky Mountain Institute to launch our Crypto Climate Accord this year. We’ll also have Melissa Koide, CEO of FinRegLab, on the important research they are doing on artificial intelligence, especially in credit underwriting. I’m excited to say that we will hear from Stephanie Cohen, Global Co-Head of Consumer and Wealth Management at Goldman Sachs. And, happily, we will be making my 2021 SXSW session with Cleve Mesidor, on Diversifying Tech, into a podcast soon.

Next week, I will be speaking at the Safe & Compliant Digital Series hosted by ING — open to a global audience. The session will focus on the ‘Power of the Ecosystem’ and how the ecosystem plays an important role in shaping the RegTech agenda. One of my fellow panelists will be my friend Sopnendu Mohanty, the genius behind the incredible innovation at the Monetary Authority of Singapore. Be sure to join us!

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