12 - The Diffusion and Adoption of Digital Finance Innovation in Africa

Summary

Digital financial technologies and innovations are opening up access to financial services to the poor. This is particularly significant in Kenya, where M-PESA has changed and revolutionized the nature and structure of the financial sector. There is, however, little understanding of the underlying mechanisms influencing the rapid diffusion and adoption of financial technologies in Africa. Following the systematic path approach to examine the emergence and diffusion ofM-PESA, and analysing the functionality of M-PESA mobile money using the technology innovation system framework, this chapter contributes to the emerging literature on digital financial innovations in developing countries. The findings suggest that, despite mobile money being introduced at a time where regulatory frameworks did not exist, there has been enactment and improvement of regulations over the years. In fact, the regulatory infrastructure in the setting of Kenya has been found to have co-evolved and improved tremendously, with the co-evolution process generating alongside it useful institutional innovation and learning.