Bad Aid

A David vs. Goliath story of unbridled greed & chicanery set in Kenya in 2008. Two strangers, a software developer and a water engineer working in Africa’s largest slum, come together to develop a revolutionary technology to send and receive money using nothing more than a basic feature phone. With the support of the UK government, they take the prototype to a UK telecoms giant, who, after receiving £2 million of taxpayer’s money, copies the design and licenses it to a state-owned telco in Kenya. The two team up to embarrass the imperial telco and shame them into honouring their promise to deploy the desperately needed payment service to all the mobile networks in Kenya. Daniel Mwangi, a water engineer, is working in Kibera Africa’s largest slum. He wonders if an ordinary feature phone could be used to enable the repayment of small loans to support micro-lending programmes, like the community schemes he’d seen in Bangladesh. Like Bangladesh, hardly anyone in Kenya has a bank account, and payments for everything are in cash. Daniel presents his idea to the UK Government’s Department for Overseas Aid (DfOA) in Nairobi, the base of some of the largest NGOs working across Africa. DfOA likes it and agrees to fund a working prototype and pilot scheme. During the pilot, money is loaded onto an electronic wallet stored on the phone - the Nokia 1710 (smartphones didn’t exist then). The technicians notice that as well as repaying the loans in instalments, spontaneously people begin to send money to each other - Mobile Banking is born. DfID take the prototype they call ‘M-Pay’ to Pan Telecom in the UK who reject it saying it would take too long to develop and become profitable. They also point out M-Pay’s weak security and access protocols. DfID is desperate to explore alternative ways to distribute hundreds of millions of pounds of UK aid to Africa instead of using cash to eliminate theft and reduce the cost of delivering their aid programmes. DfOA is so keen, they offer Pan Telecom £1 million towards the development cost. Pan Telecom refuse. Meanwhile, cryptography graduate Simon Heslington, volunteering for Oxfam, hears of the project. He understands M-Pay’s potential for financial inclusion and helps make M-Pay's security more robust. DfOA and Simon return to Pan Telecom to demonstrate the prototype's new security features, but again, they refuse despite being offered £2 million of taxpayers' money. How can illiterate people and those on low incomes afford, let alone use, a mobile phone, their overpaid executives ask? As they leave, Simon mentions in passing that airtime can be bought instantly from anywhere using the money stored on the phone. This is a lightbulb moment for Pan Telecom as they are losing millions to scratch-card fraud and the massive cost of manufacture and distribution from a secure facility in South Africa. In addition, airtime scratch-card distribution occurs through a murky pyramid of middlemen and street vendors concentrated in the major towns and cities, through which organised crime is rumoured to be laundering vast sums of cash. After pressure from the British government, Pan Tel finally agrees to deploy the service across Kenya if DfOA, Daniel and Simon give up their rights to the system. They do. A year later, Pan Telecom reneges on its promise, instead launching the rebranded M-Pay service as ‘JamboPESA’ through a partially owned subsidiary, Kentel, a loss-making mobile network, majority owned by the Kenyan government. Pan Telecom issues a press release heralding JamboPESA, a new ground-breaking payments service, a triumph of British technology targeting the unbanked. There is no mention of Daniel, Simon, DfOA, the £2 million of UK taxpayers' money, or the exclusive license Pan Telecom has granted Kentel. Commercial terms are kept secret because it commits loss-making Kentel to pay £25 million over two years. Where is the money going to come from? Protests by DfOA and the British government fall on deaf ears. Daniel and Simon are determined to force Pan Telecom to honour their promise. Using a back door left by Simon when he worked on the M-Pay prototype, each Friday afternoon, Simon credits every user on the Kentel network with 100 Kenyan Shillings (75p) of airtime; word spreads like wildfire, and thousands of new customers desert the other telcos as they scramble to join the Kentel network. Kentel can’t cope; their poorly maintained network is close to collapse; they drop calls and are collecting virtually no revenue due to Simon’s free airtime top-ups. In desperation, Kentel call in Pan Telecom in an attempt to stem the dramatic loss in revenues. Kentel sues Pan Telecom, claiming breach of contract for a faulty system, but it will take months for the case to be heard at the High Court in London. However, Pan Telecom and DfOA are desperate to avoid a hearing as it will expose the terms of the agreement and cause irreparable damage to their brand reputations. The president of Kenya intervenes in an attempt to resolve the chaos in Kenya’s telecoms industry - his mother, the largest private investor in the telecoms sector. Daniel and Simon dramatically up the stakes by adding a Robin Hood scheme. With the help of Daniel’s grown-up daughter, they identify worthy causes to help financially. They begin sending money to orphanages, village schools lacking textbooks and other basic essentials, community initiatives at Kentel’s expense; Kentel is powerless to stop it and finally capitulates on condition that they are shown how their systems were hacked. However, they don’t mean it; they only want to find out where the security weakness in their system lies. Pan Telecom and Kentel executives assemble in Nairobi expecting a UK developer to reveal the technical flaw in the system, but instead, Kiki, Daniel’s 20-year-old daughter and a skilled programmer trained by Simon, enters the room. They think it’s a joke; some deride the young woman they see before them. Kiki reveals the flaw in the system’s source code and how the airtime credits and payments are being made. Pan Telecom and Kentel are gobsmacked. She reminds them again of their promise to her father and Simon, and any backsliding will result in further hacks to their network. Pantel’s executives are furious; they want their money back and they want revenge. On the launch day of a second service ‘EasyPay’, a white-labelled solution running on the Kentel backbone supported by the M-Pay software, this time with a large savings bank serving the bottom of the social pyramid in Kenya, Kentel sabotages the launch with Kenya’s TV and press in attendance, fronted by the charismatic and energetic CEO causing it to be an embarrassing failure. In response, Simon and Daniel decide that the most drastic action is required. Simon converts the cash balances held in JamboPESA's trust accounts to US dollars and sends them to a bank in China, instantly causing Kentel to become insolvent. Kentel must now explain itself to Kenya's government and the Central Bank. Kentel is forced back to the table to give their solemn word to honour their agreement. The story concludes with the funds being converted back to KES and returned from the Chinese bank to JamboPESA house banks in Kenya. Kiki is given a role as a software developer at Pan Telecom to oversee and monitor fair play and ensure that access is granted to any provider who can support a payments service either on the Kentel network or any other. Eventually, the service is rebranded ‘EasyPesa’ (Pesa is Swahili for a penny) and becomes the first universally adopted mobile banking service in the world, with 45 million users in a country of 60 million people, enabling everyone to access the service, including the residents of Kibera, Africa’s largest slum. Pan Telecom never collect the £25 million.