About the Event

Jonathan Greenacre, Assistant Professor of Global Development Policy at Boston University, discussed his latest book, “Mobile Money in Africa,” which discusses the role of bridge contracts in enabling mobile money technology to spread in Africa and explores implications for the international development community.

About the Book

How did Safaricom, a phone company, provide mobile money to 30 million people in Kenya, particularly in rural areas? Most analyses focus on how Safaricom grew by using mobile phone technology and supportive regulation. However, a closer analysis reveals that Safaricom grew using relatively rudimentary customer-facing technology and experienced its first wave of expansion before the Central Bank of Kenya imposed regulation.

This book argues that along with technology Safaricom used innovative contracts to grow and reach rural communities, largely monitored and enforced largely by the CBK. In particular, Safaricom used a set of contracts to build a system transferring money between banks and mobile money 250,000 agents across Kenya, including those living in rural areas. These “bridge contracts” were highly flexible and relational, and helped build a marketplace of agents, mobile phone airtime sellers, banks, customers, and groups of agents trading electronic money and cash from each other. Safaricom also used contracts and a trust deed to store funds received from customers.

The book supports this claim by combining a contract theory framework and primary data obtained from fieldwork in Kenya, Malawi, Tanzania, Ghana, Uganda, and Rwanda. Such fieldwork reveals that mobile money firms in other countries also grew by using innovative contracts monitored by the central bank of the relevant jurisdiction, particularly Tanzania and Ghana.

The book uses such insights to make policy proposals for regulating mobile money and the international development community. Both proposals revolve around encouraging the international development sector to existing spontaneous order and contracts operating between firms, agents, and a community, before design policy, not the other way around. The book also argues that the innovative contracting within M-Pesa, particularly its decentralized nature, can contribute to understanding the theory of the firm in Africa, a general theory of New Institutional economics about how organizations adapt to their environment, and how scholars can begin applying mechanism design, market design and other fields of so-called engineering economics to the African context.

About Jonathan Greenacre

Jonathan Greenacre is an Assistant Professor of Global Development Policy at Boston University, where he focuses on designing contracts to support new technological innovations in Africa and other developing regions. He draws on frameworks from contract theory, law, and New Institutional Economics.

Greenacre has particular expertise in analyzing and building “bridge contracts,” which firms and governments are using to move into rural and frontier areas in Africa. He is exploring mobile money in Kenya, “Hello Tractor” which is a so-called “Uber for tractor” sharing app in Nigeria, and the “Bboxx” micro-solar energy service in Rwanda.

Professor Greenacre also has extensive experience in the regulation of new technologies and financial products, particularly in the developing world. He has advised the United Nations, World Bank, International Monetary Fund, governments in Africa and Asia, and a range of other organizations on issues around financial inclusion, consumer protection, and systemic risk. Greenacre has a Masters and a Ph.D. from Oxford University.

About the Nardone Family Seminar Series

Made possible by a gift from David R. Nardone, this seminar series brings scholars and practitioners to Northeastern University to share insights on emerging markets.   

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