How a Fintech Company Helps Workers in Africa Access Credit and Savings with Smartphones

JESSE MOORE: We have provided smartphones and additional financial services to over 5 million everyday earners across the continent across Kenya, Uganda, Nigeria, Ghana, and most recently, South Africa.

The entire origins of the business and the continued focus of the business is using a principle of no tradeoffs, you know, the principle is we can help, make everyday earners lives better, or in M-KOPA we say make progress, in their lives with the financial access and the digital access while at the same time building a business that will be more than sustainable, will be profitable, and it will provide adequate returns to shareholders and lenders, so the pursuit is very much on both sides at the same time.

Fundamentally, if we're not making people's lives better, we're going to be out of business in a minute.

J.B. WOGAN: I’m J.B. Wogan from Mathematica and welcome back to On the Evidence.

[ Music ]

On this bonus episode, Jesse Moore explains the business model and mission of M-KOPA, the global fintech company he directs and co-founded that provides smartphones and financial services to low-income and unbanked workers across the African continent.

Jesse spoke with Mathematica’s President and Chief Executive Officer Paul Decker in December of 2024 during Paul’s visit to Mathematica’s offices in Nairobi, Kenya.

M-KOPA, which is headquartered in Nairobi, provides financing to “everyday earners” in Kenya, Uganda, Nigeria, Ghana, and South Africa so that these workers can afford smart phones. For these everyday earners, the upfront cost of a phone would take months, if not years of savings, to afford. And yet, the technology is critical in today’s economy for building a business. Everyday earners, in case you’re wondering, are people who have regular but informal work, and they include hairdressers, motorcycle taxi drivers, farmers, and carpenters.

Once these workers have smart phones, they’re able to build credit and access other services, such as insurance and savings accounts. M-KOPA’s customers do not have conventional salaried jobs with regular paychecks at the end of each month, so they are typically unable to open a bank account or put down a deposit on a business asset like a smart phone that they would pay for over time.

Paul and Jesse talk about balancing a company’s social mission with its need to earn a profit, and the advantages of pursuing social causes through a for-profit company that can scale up and adjust strategy based on customer feedback. They also talk about how M-KOPA uses evidence to understand how its products and services are generating benefit to customers.

If you’re new to Mathematica’s On the Evidence podcast, please consider subscribing. More information how to subscribe on your podcasting app of choice is available at mathematica.org/ontheevidence.

I hope you enjoy the conversation.

PAUL DECKER: Jesse, welcome to Mathematica's On the Evidence podcast. I'm fascinated by your organization, M-KOPA, but first I'd like to know more about your background. How was it you came to develop an interest in global development and how did you get interested in providing access to financial services and digital access as part of those efforts.

JESSE MOORE: Sure. Well, first, thank you for the invitation and the time to tell our story. From my own personal side I grew up in Toronto in Canada. Definitely wasn't in my life plan to move to Nairobi and build a Pan African business, but I'm, I'm so thrilled and charmed in the way that it's all developed.

The long story short, is that as I finished undergrad I was very fixated on working in the development space. I thought potentially joining the United Nations or a large international NGO was, was sort of the pinnacle of what I, what I would want to do. I did work for a leading international charity for a number of years in my 20s.

But I was a little bit frustrated in that work. In particular, because I saw that the beneficiaries we were trying to help didn't have a lot of power and choice. There wasn't a relationship whereby they could vote with their, you know, shillings or dollars and sort of inform us as a charity of what was really valuable.

And everything wasn't inherently scalable because of the lack of a for-profit model, which isn't, I'm not trying to say there isn't a huge need for conventional development and charity. There is. But my interests were gravitating much more towards private sector solutions that could enable positive change at the same time as, as being profitable and therefore infinitely scalable.

PAUL DECKER: Use the market to help.

JESSE MOORE: And again, you can't do that in every context, but you can in some, in the context where it seemed to me in my 20s, very, very important, sort of, opportune was when technology and innovation was applied. Anyway, let me fast forward to 2005 or 2006 when I was in Kenya, working for this charity and I met a bunch of farmers who we were helping access markets and the farmers had all recently gotten mobile phones.

JESSE MOORE: And that was a big aha moment for me as a Canadian. Probably 27 at the time. My parents back in Toronto in that same year didn't have mobile phones and here were farmers in the middle of the rural countryside of Kenya who did, and it just, you know, is an illustration of the leapfrog nature of that technology and for these farmers, they were very clear that this was taking them from an information void.

To you know, and this wasn't a smartphone, this was just a basic mobile phone, but the ability to call markets and find out what the pricing would be, or the ability to get some predictive weather information, or to contact. One guy said, “Look, my, my mother is quite ill. And every Sunday I spend a significant amount of my income, taking a bus to go see her and make sure she's okay and then coming back..”

Well, now he could call her every single night for a fraction of the cost and, and check on her wellbeing. And anyway the particular engagement that day with a bunch of farmers here in Kenya led me to realize how powerful mobile technology could be for them. And from there, I decided to switch my career path and go do an MBA in order to pivot into the private sector, but with a big interest in telecoms and this continent.

So I was up at Oxford in the UK for the MBA. And as it happens, 45 minutes down the highway from Oxford is Newbury. Newbury is not a big, well known city in the UK, except for the fact that it was the global home of Vodafone Group. And Vodafone group still has a major shareholding in a number of African telecoms operations, including Safaricom here in Kenya.

So I sort of badgered my way into a job after the MBA and ended up back here in Kenya to help work on a product called M-PESA. And for those who are unfamiliar with M-PESA the quick story of that is it was created by my now co founder in M-KOPA, but a wonderful team headed by a guy called Nick Hughes.

And what they purported back in 2005/6 was people who got simple smart sorry, mobile phones, not smartphones, might need and want to be able to send money to each other through text messaging. And that took off in a big way here. And I was privileged to be able to work on that for a little while.

So those are the whole beginnings of you know, my career moving from a development. Sort of classic development career path towards innovation and technology and business approaches and then got a lucky break really working on M-PESA for a few years and that led us to start M-KOPA in 2011.

PAUL DECKER: So, 2011, you said. So tell our audience what it is that M-KOPA does.

JESSE MOORE: Right, well, what M-KOPA does today, is we finance smartphones to everyday earners. Everyday earners being the largest by far in a way, the sort of majority population of the Africans, African adults. Everyday earners, meaning that they do not have a conventional salaried job and there's no paycheck that comes on the 30th of the month or the 31st of the month. That does not mean however, I mean that these folks don't make an income, they make a significant trade.

JESSE MOORE: But in day in, day out informal work, that could be being a motorcycle taxi driver. It could be being a hairdresser. It could be being a carpenter. It could be being a farmer. And what we do as M-KOPA is help those individuals afford a smartphone, which in 2024 is almost now a critical piece of technology to engage in economic activity, right?

So back to those use cases. If I'm a motorcycle taxi driver, I need a smartphone to be on applications to hail rides. If I am a hairdresser, I need to be keeping up with the latest styles and trends on social media and, you know, marketing myself to my customers through social media, et cetera, et cetera.

It might sound weird like, well, smartphones are available, they're kind of ubiquitous. Yes, but they do cost even at the lowest end, a hundred dollars or more, up front. And if you are an everyday earner, amassing a hundred dollars is an extremely difficult task.

PAUL DECKER: Right. So it's a major hurdle.

JESSE MOORE: It's a major hurdle. It's the equivalent of, almost the equivalent of putting down a deposit on a home in the North American context. It takes months and months, if not years, for an everyday earner to be able to save, you know, $100 or $200 to buy that asset.

PAUL DECKER: And you can't just go into a bank because you don't have the documentation of a stream of income.

JESSE MOORE: Exactly. So the second part of the equation is, okay, I don't have a lot of cash because I'm earning and spending daily conducting my business. And again, I'm getting by, I'm making enough money to pay my rent. I'm making enough money to buy food. I can hopefully cover the cost of my kid's education, but it's difficult to save and I don't have access to credit and I don't have access to credit because I don't have a job with a normal payslip.

And that's sort of the rails that banking is based on, right? Banking is predicated on, “Hey, we see that Jesse has a contract to be the CEO of M-KOPA and he gets paid a salary and here it is. And then we can lend against that as our security.” Well, what happens when you don't have that security? And back to the beginning, that is 90 percent of the adult population on the continent.

So the fundamental problem and opportunity is that 90 percent of the population does not have a salary and therefore doesn't have conventional financial services. We have invented a way to change that by bringing financial services to everyday earners. And it starts with that smartphone. So the smartphone is something we finance over six to 12 months rather than paying for it up front, in order to give people the tool that helps them make more money.

JESSE MOORE: But as we are financing them that smartphone, we're also building a credit score for the first time on that customer. And that credit score can then be used with the phone to enable the cross selling of additional financial services like insurance and savings and more. And so today we have provided smartphones and additional financial services to over five million everyday earners across the continent, across Kenya, Uganda, Nigeria, Ghana, and most recently, South Africa.

PAUL DECKER: That's a big effort.

JESSE MOORE: Yeah. It's a big company these days. Some interesting stats, you know, let's take yesterday, for example, yesterday we sold about 7, 000 smartphones to people across those five markets and what's I think quite special about those 7, 000 people is we didn't know them in the morning.

When we got up as a company, we didn't know who the 7, 000 everyday owners would be that we would enlist. And we didn't need to credit score them because again, there's no available predictable data upon which to credit score them. What we do, you know, do every single time is get solid KYC data.

So every customer who buys a phone with us yesterday would be, you know, submitting their identification. We would take a photo of their ID, cross reference that with the, the national bureaus and whatnot. So we know who the individual is, but what we don't know is whether they are creditworthy because nobody knows whether they're creditworthy.

So we take a bet on 7,000 people a day, issuing them a smartphone as a way to then build a business, later selling them additional financial services through those devices. Also yesterday, we sold about 7, 000 other financial services through the phones that we've sold. And the last stat that's really cool about M-KOPA these days is as you know, again, yesterday, we were paid more than one million times, on the day,

Which is 12 and a half times per second. So as we've been talking here for the last five minutes, we've already been paid, you know, another thousands of times, Because you've got all of these people with their smartphones making daily payments for their phones and their financial services and every morning getting up and making that choice and saying, yeah, it's worth another 30 cents or 50 cents or whatever their particular packages to pay for this device and build that credit score with M-KOPA.

PAUL DECKER: So just to try to help expand understanding of the population you serve, can you just give a little vignette about what a typical customer might look like? What's their profile?

JESSE MOORE: Yeah, happy to talk about Lydia. Lydia is a typical customer of ours who works as a food vendor. She basically prepares porridge and sells that door to door in Kibera. I point this way because Kibera is roughly a couple of miles behind us. Kibera is one of the larger low income slums in Kenya. Lydia has a, you know, her house. I've been there. She's got a sort of a simple house she lives in with a kitchen off the side of it. And that kitchen is for her commercial purposes where she makes, you know, this porridge and other foods, and then she'll sell it door to door in her community to businesses and schools and to families and whatnot. And, and so in her case, again, not banked, but making an income of a couple hundred dollars a month, selling porridge. So probably yielding four or five dollars a profit per day,  trading that food door to door. So until a few years ago, she would have done that just by word of mouth, but increasingly, she wants to be on, or through a smartphone on the Internet on social media to connect with potential customers.

And so the smartphone that we were able to finance her, you know, got her through that important digital gap. And now she's on the other side, making more income and then again Lydia wouldn't typically have access to financial services from banks because she's sort of off the radar. Well, through her phone, Lydia has been able to acquire health insurance that can cover her and her children in the case of you know an emergency or she needs to go to the hospital.

What happens in that case, is Lydia might be paying 50 cents to access a smartphone can then spend another five or 10 cents a day to get an insurance bundle built into that. A new, product that we're just rolling out at the moment is also to help Lydia get airtime and data for her phone more cheaply than she can otherwise to unpack that.

Lydia doesn't have a contract with the phone company, because the phone company can't give her a contract because again, she doesn't have a credit score. And so what that means is Lydia will be buying her megabytes day in, day out, even hour by hour and doing that on a prepaid basis. So hey, I wake up this morning, I'll, I'll send 25 cents to get whatever, 50 megabytes to run my business until lunchtime.

And then I'll use some of my earnings at lunchtime to buy another 25 megabytes or 50 megabytes. That's fine, but it's very expensive to prepay. And so we have been able to establish a way to effectively contract her to a daily amount of 25 cents, but she gets, you know, significantly more data because of the commitment she's making and we're doing the underwriting.

So it's, in a way, it's creating what everybody, or not actually everybody, but most folks in the United States would understand to be normal, which is I get a contract for a smartphone. I don't pay for it all up front, right? When you get your iPhone 16, you don't shell out all the cash. It's bundled into a two-year contract with Verizon, whoever you're with.

Those dynamics have not taken hold yet in Africa, at least for everyday earners, because of the lack of credit scoring and the lack of a salary. We've basically been fixing that. With a prepaid approach for, you know, for the Lydias of the world to get cheap and affordable communication services as well as financial services.

PAUL DECKER: Is there competition in this market? Are there other organizations that are providing similar services?

JESSE MOORE: They're coming. Yeah, they're coming. You know, it makes sense and the market's huge. So we, we have acquired about two million new customers this year. Which seems it is a big number, but it's a small number relative to well over a hundred million people on the continent every year who could use those services.

So I would expect you're going to see others doing it. The challenge, however, in building the business is all of the credit analytics that one needs to amass and perfect in order to get them funding to then run the business. Cause it's an expensive or it's a cash intensive proposition.

Back to yesterday, if we issued 7, 000 smartphones to people, we don't know, that's putting millions of dollars out the door in the form of hardware, right? And so how you get those millions of dollars to buy the phone to then put them out is, is quite a, you know, pickle and it's taken us a decade or so to build the credit analytics to be able to go to major financial providers like banks and get them to provide us with significant amounts of capital to then turn into the phones that lead to the users.

In our specific case, our big lending partner for the business is Standard Bank. Standard Bank is the largest bank on the continent with operations across, I think, 18 markets and they currently lend to us over $150 million worth of capital in the local markets where we operate in local currency. And it has been a journey for Standard Bank and for M-KOPA to grow together based on clearly a big market need, but a pretty unconventional credit approach. It has taken time and effort and scale for us to be able to build the credit engine underneath the hood that gives the bank comfort to lend that sort of scale of commercial capital against the opportunity.

And so, you know, to answer your question a little more simply, yes, there will be competition. There should be competition because it's a big space, but we're all rate limited by insufficient amount of capital to meet the need across the continent today.

PAUL DECKER: And you, and you mentioned an advantage for your organization is having built alot of the engine underneath and having strong partners and and influential partners in that market. Are there other things that you think are important in your mind for setting M-KOPA apart from those that might compete?

JESSE MOORE: Yeah, I think in addition to the credit analytics and the challenge of getting, you know, significant commercial scale behind you, there's two other things we do.

JESSE MOORE: That might surprise people. So everything we've talked about so far has been credit and analytics and data and millions of payments a day. That's great. That's kind of the software and sort of you know, data side of our business. But to get there, we have to do two other things quite well, which are far more operational than some people would expect.

The first thing we do is we build our own smartphones here in Kenya in what is the largest assembly factory on the continent. We do that because it's the lowest cost way to get smartphones out into the market and into the hands of Lydia. We want to make sure we cut down the cost of that device as much as we can while still preserving good quality.

And one of the ways in Kenya that that can be done is by localizing the assembly, creating jobs, and we now have an ISO 9001 certified beautiful factory with nearly 400 employees making millions of phones a year. That's not what you might expect, you know, hearing from this credit and analytics business that it's running a huge smartphone brand and factory, but that is indeed what we do.

The next thing we do is a very unique distribution. Again, you might think, well, I don't know, don't people just order these online and you ship them by Amazon? Well, no. People don't have a smartphone to begin with, so they're not ordering online and we've even gone so far as to realize that conventional bricks and mortar distribution to sell through your phone stores or your supermarkets or whatever.

That's quite expensive and it doesn't, also to Lydia because where Lydia lives there aren't gleaming, you know, malls with lots of smartphones on the shelves, okay, so how have we solved that? Well, we have created Africa's largest distribution salesforce, which is today over 30,000 people strong, and that's 30,000 people strong. And that 30,000 people who sold devices to their friends, family, and community last month and got paid a commission by us to do that. So we sell through agents because A, there's an abundance of people looking for a way to make an income and this is a good way to do that. You don't need any, you know, any qualifications. You don't need to have a high school diploma.

We will take anybody in, train them and give them the chance to go become an M-KOPA salesperson, similar to kind of an Avon lady salesmodel, you know, if you know that story. But we also do it because it's cost effective. We also do it because it gets the products right out to Lydia, so Lydia may have actually purchased her smartphone while she was cooking in her kitchen, you know, in her kitchen off of her, her house in Kibera, because our agents can actually come to her to sell her the device in her place of work. And then the last thing is we are able to leverage a little bit of credit, sort of know how. Even informally from those agents, because the agent who sold to Lydia, who I believe in this case is called Jane.

So Jane sells to Lydia partly because she knows who Lydia is, and she believes Lydia is going to be a good customer. And Jane then gets paid partly based on the performance of Jane over time. For those who know microfinance and I know it’s probably very familiar to you, microfinance as an industry.

JESSE MOORE: And sorry breaking for your audience, “What does microfinance mean?” Microfinance basically means banking applied to the underbanked population in parts of the world like Africa. Alot of the fundamentals of microfinance have been based on social and community, you know, sort of capital and networks that are again, a bit off the radar.

And so we've, we've cribbed from those playbooks of conventional microfinance and realize that our agents can probably best pick the right customers for M-KOPA. And so those 7,000 people a day, while we don't know them, our agents know them, and that helps us with the overall credit quality.

PAUL DECKER: Yeah. Yeah. It's in effect an addition to the screening process.

JESSE MOORE: That's right. So back to what I'M-KOPA is today and all the things we have to do, we're running the biggest smartphone factory in the continent, to then put phones into the backpacks of the biggest salesforce in the continent, to then go and find 7,000 Lydias every single day, who we will issue a smartphone to on credit which In turn is the, to our knowledge and certainly in our sector, the largest balance sheet, you know, the largest sort of lending operation in Africa, over 250 million currently outstanding.

And last but not least, is the cross selling of additional financial services which is now moving at a clip of, you know, over a million products per year. So it's quite a large business in some ways 4-in1, but vertically integrated in a way that creates a lot of you know, sort of execution advantages for us as well as helps us balance our, our profitability and margins while, you know, giving customers a really good valuable, value proposition.

PAUL DECKER: Customers and others involved in that vertical chain that your social impact is not just the services provided at the end of that, but it's the jobs that you provide in the production of the phones, the employment of the agents to provide that service.

JESSE MOORE: I'm glad you mentioned, you know, social impact. So we've talked a lot about this so far as a commercial entity, but the entire origins of the business, and the continued focus of the businesses, using a principle of no tradeoffs you know, the principle is we can help make everyday earners lives better, or in M-KOPA we say make progress in their lives with the financial access and the digital access while at the same time building a business that will be, you know more than sustainable, will be profitable, and it will provide adequate returns to shareholders and lenders.

So the pursuit is very much on both sides at the same time and we do a lot of deep research every year and we issue an annual impact report publicly that looks at the ways that our products and services are generating benefit and importantly, where they're not, right, where we have to get better in terms of impacting our customers.

JESSE MOORE: But fundamentally, if we're not making people's lives better, we're going to be out of business in a minute. Right. I often remind myself and our team that we could wake up today and expect that we're going to get paid a million times, right? Most days we're getting paid, as I said before, about a million times, it's about a dollar per payment.

So we're getting about a million dollars in every day, but there's nothing stopping those million people from waking up tomorrow and deciding not to pass. There's not much we can do about that. There's no repossession. There's not a sort of super robust credit bureau to report people to. We don't really have a stick there.

So we're relying on people waking up tomorrow and deciding to put their hard-earned money into their M-KOPA proposition, right? And that's been one of the hardest parts of our business, but in the long term, I think, one of the best parts of the business model design is that fragility, right? Is the fact that if people woke up tomorrow and they're like, you guys aren't worth it, we will know, you know, right away that they are voting with their fingers or with their feet not to pay us anymore.

It's kind of, you know, from one of the business school classes, I remember finding very instructive was, was the Toyota assembly line, you know, case study where there were so many points of fragility on the line and any single worker could pull the end on cord and say, yeah, this mirror isn't quite right.

This tire isn't quite right, whatever. And that fragility was very frustrating for a while, but ultimately led to Toyota having much better quality. I kind of think of the quality assurance along that line as having similarities to our customer repayments. And again, if they, somebody wakes up and Lagos tomorrow morning is like, I don't feel like I'm getting good value from M-KOPA anymore. They can just walk away and we don't have a lot of recourse.

PAUL DECKER: Underlying a lot of the discussion here around your organization is the use of data and evidence and it threads through every aspect of the organization. I presume from what you've described. It threads through how you decide to make decisions around products and offerings that are brought to market, it underlies the operations of the model that you've described.

And it also underlies, as you pointed out, measuring your impact. So I'm interested in kind of your perspective on the use of data and evidence and how you think about how you've managed that in a creative way to drive the business, to make key strategic decisions and to demonstrate the impact that you have.

JESSE MOORE: Well, I tend to think about data as a, you know, common, commonly used term these days and for good reason. Sometimes to me, the data is ultra simple and like, doesn't need much computation and other times it's extremely complicated and requires loads and loads of computation and both of those need to be done well in, at least in our organization, for us to succeed.

JESSE MOORE: Sometimes it's sort of very simple. You know, stuff that, that matters. And, sometimes it's very complicated stuff that matters. And we need to respect both of those sides of the data equation. To give you the simple one as an example, we only started financing smartphones five years ago as a business, we were financing other assets prior to that.

And so a lot of people say, well, what, what was it that led you to decide to finance smartphones in 2020. And the simple data was, well, we called a thousand of our customers and we just asked them what it was they wanted. And the majority of the people said smartphones. And so that was the data we needed, right?

It was, you know a sample size and very straightforward. So that like, and in a way that's probably the most powerful data we've ever received because it turned into the commercial strategy which is now so huge. So that's simple data where you just, you know, don't want to miss the forest for the trees.

On the other hand, the complex data, is probably the best expression of this, is our cashflow projection model, which is the model that underpins all these big lending relationships with banks. And that cashflow projection model is built on the million payments plus that come in every single day across millions of users and basically sit in a massive machine learning you know, sort of model that, that is constantly retraining and retraining.

And basically what it's doing every day is it's looking at the payments from what we call cohorts. Our cohorts are defined as the people who bought the smartphone today versus yesterday versus the day before. So we've got hundreds of cohorts going back, you know, for the past five, six years and all of those cohorts have then thousands and thousands of payments every day, but there's instructive patterns that emerge if, you know, the cohort of January 1st, when it comes to, what's today November or no we’re in December now, so anyway, you know, 11 months later, there's a certain expectation of the cash flows that should come from that cohort. And that can be compared against all the other cohorts that ever existed. So I can't get my mind around how complicated and big that machine learning model has to be to do all that computation and ultimately tell us, “Has the cohort that we sold to today going to perform?” which is what we wanted to do.

But that's an example where, you know, the complexity and the data richness of the machine learning model and the great data scientists that we have in the company who are building and optimizing that model also create significant value.

PAUL DECKER: Jesse, I appreciate what you're telling me about the use of the data in your organization, how critical it is to your operating model to use those data for predictive analytics that support the model. Thinking about that brings me to AI and thinking about kind of what the role of AI is in running your organization now, and also about kind of how you're thinking about AI as a tool to leverage the ability to serve underserved communities more effectively going into the future.

JESSE MOORE: Yeah. Well, look, I think we've been ahead or, you know, I think we've done pretty well so far in leveraging AI for computation and for analytics. So, the data science team that's built, you know, our major credit models have been using pretty advanced. Machine learning practices for several years and so that has to continue.

But, ultimately what we're doing there is taking a lot of payment data points on customers who haven't had credit histories and building credit histories for them as quickly as we can. Right. And that's very powerful. Where we're still early, I think, in AI is how to use it for the most efficient service delivery to our customers.

Forty percent of the customers who we sell smartphones to have not had a smartphone before. And if they're going to struggle in any way with utilization of that smartphone, that's going to be a credit problem for us because if they're not getting the value out of the phone, well, why are they going to pay for it?

And so we have a natural bias to want to make sure people are getting whatever support they need to use the device successfully and make them an income and be able to pay for that device. I suppose the most obvious opportunities right now are to use bots to sort of automate a lot of the standard queries and customer service responses and being able to do that with bots should ultimately be a lot cheaper for us.

And so it can keep our costs to serve our customers you know, low. I think there's probably other ways. And many organizations are grappling with this now, but how can you utilize AI to improve your HR and your legal and your finance? And just standardize a lot of the reporting and a lot of the contracting and whatnot.

So we're beginning a process now with our friends at Microsoft who have been long term. technology partners for us in how to deploy Copilot and these other tools inside the business to make us more robust. For me, it's very important as we scale geographically, right? We're in five markets today.

JESSE MOORE: We aspire to keep adding markets every year or two as we go forward. And if you can assume that you can go to the next market with the rails of the business, the operating rails really well developed, part of that's our own software stack, part of it's the sort of data and the KPIs that we expect managers to focus on.

But some of it can also be the AI support rails that I think can automate and risk mitigate a lot of execution. That feels to me like a really good investment for a business that wants to be across dozens of markets in the long future.

PAUL DECKER: Looking out to the future of M-KOPA, we've talked a little bit about, or we were talking before off camera, about a development of an e-bike business and I wonder both how that's going, but also what are the other businesses that you are ruminating about that might come out in the future?

JESSE MOORE: Yeah. So you're right. We have a subsidiary business called the M-KOPA mobility and M-KOPA mobility has been in R and D for the last couple of years, but is now coming into early commercial scaling.

The idea was to take the same approach to financing a smartphone to financing an electric motorcycle. Electric motorcycles, or motorcycles generally in this market, are the people and cargo movers. So there aren't a lot of cars, but there are a lot of two wheelers because they're cheaper and they also get into the muddy and some somewhat smaller roads that lead to people's neighborhoods like where Lydia lives.

And so motorcycles are the people and the cargo movers of the continent. The opportunity is to electrify them not only because it's a huge win for the environment and for public health, but they are more economical over time, right? If you don't have the running costs of petrol and you flip to electric, you're going to make your money back within 18 or 24 months.

Hence the financing requirement. As with all electric cars, they're more expensive up front than petrol or diesel, but they pay back over time. And so what we decided to figure out is can we be a financing partner, to the everyday earner, probably a motorcycle taxi driver by financing him or her, an electric bike that saves them money.

And so after a couple of years of R and D this year we've now got to over 2000 electric bikes on the road, which represents you know, nearly half, I think of all the electric bikes in the country. Which is great. It is still quite small relative to the addressable market, and what's happening right now in Kenya is a combination of positive government policies to help stimulate electric vehicles as a category plus the development of OEM providers who are making electric bikes that are fit for purpose for the African roads.

JESSE MOORE: And we're there effectively as a financing and distribution partner to get those bikes out. And then doing the same thing we've done with credit analytics on smartphones and other products historically, which is build an evidence base and the database that proves that the repayments will come over time so that then big financial institutions can bring their millions of dollars behind it to buy the stock and scale the business.

PAUL DECKER: So you've had a lot of success with M-KOPA during the times that the company's been in operation. Is there one, perhaps one lesson you can highlight based on that success, particularly in terms of serving the needs of the African public to serving their needs?

JESSE MOORE: Yeah, I think I’d probably like to mention two things that I think that have been key to our, let's say, relative success. It hasn't all been easy. It hasn't all been wins. There's been tough times as well. But I think you're right, over time, we've clearly created something that's significant at scale, having a positive impact, both commercially and socially and five million-plus customers and millions of payments a day is sort of evidence of that.

So what have we done well, to be on this track? To what you said, we have always started and ended all of our product development focused on what our customers need. And we've done stuff that frankly, globally is like different. Some people might call it bonkers. I'll give you an example. Our customers don't have to pay every day for their smartphones or their electric bikes.

They're allowed to take a day off. And when they do take a day off, they don't have to pay for that day in order to get back on track. So there's flexibility built in. And let me give you..

PAUL DECKER: Is that policy based on data analysis of the experience?

JESSE MOORE: Well, I think it's been supported by data analysis after the fact, but at the very beginning, it came from conversations with customers, right?

And here's the use case back to, I'll use Lydia as an example. Lydia sells porridge door to door. And if on Sundays, nobody's buying porridge because everybody's cooking their own food at home. Well, she doesn't need to use her smartphone on Sunday to go conduct her business. And so you don't want to force her to spend 40 cents that is very hard for her to afford on a product she's not going to use.

So we say, fine, take Sunday off and when you come back to Monday, you know, she doesn't have the cash to pay for Sunday and then Monday again. So we said, fine, you can pay for Monday and your phone's going to work again. Now within this, is all within sort of certain bounds. If she takes, you know, every second day off, her credit profile with us, it’s gonna be not eligible for upgrades and everything else.

JESSE MOORE: But sort of simplifying the point, we have designed a lot of our credit approaches and products and payment policies against the needs of everyday earners rather than, “Oh, this is what it looks like in another market. And let's kind of squish it onto Lydia,” because that tends to break, right. So, I think our strength comes from being quite brave in a way to throw out the rule book and build a proposition from the bottom up that really speaks to the needs of Lydia and then figuring out how the sort of business needs to operate to serve that need.

The second thing is, we have pivoted and continue to pivot and be agile. Maybe, more than pivot, just be agile in adapting the business to changing circumstances. This smartphone factory I mentioned before, we didn't expect that a couple of years ago to be where we would be now. But the Kenyan government, I think, made a very progressive decision and created policies to basically charge much more for imported finished smartphones and reward anybody who wanted to create local jobs to create smartphones.

Again, we're a kind of credit driven fintech and many people would question, “Well, why would you guys wouldn't you go build a factory would you?” “Well, yes, we would.” We happen to have some capability in the company that had done that in a different industry before. And we said we're willing to do what it takes to get the lowest cost products in the right way, you know, other great benefits of creating jobs and everything else.

So that agility is critical. And I don't want to lose that agility, ever. Even though we have what is clearly a replicable, you know, tons of growth core business, our passion for agility and flexibility and responding to market dynamics and customer needs is core to our success and will be core to our success forever.

PAUL DECKER: Jesse, thank you for your insights, sharing your insights with us today. And I also thank you for your contributions that you're making through M-KOPA.

JESSE MOORE: Thanks. It's been a pleasure.

J.B. WOGAN: Thanks to our guest, Jesse Moore, and thanks to Paul Decker for stepping in as the guest host for this episode of On the Evidence, the Mathematica podcast.

If you're a fan of the show, please consider leaving us a rating and review wherever you listen to podcasts. To catch future episodes, subscribe at Mathematica.org/OnTheEvidence.

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