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It also describes how digitization can strengthen state capacity while creating new state demands and outlines key challenges ahead, including connectivity, interoperable payments, consumer protection, and a transition to e-ID.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & 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Street NW Fifth Floor Washington DC 20036 202-416-4000 [www.cgdev.org](www.cgdev.org)  \nThis work is made available under the terms of the Creative Commons Attribution-NonCommercial 4.0 license.  \nDigital Technology and State Capacity in Kenya  \nNjuguna Ndung’u  \nAbstract  \nFollowing the launch of M-Pesa in 2007, Kenya has emerged as a global leader in the development of mobile money and in increasing rates of financial inclusion. This paper shows how M-Pesa’s success has led to a series of endogenous innovations that have shaped Kenya’s digital space, placing it ahead of other developing economies in the region in the deployment and use of digital technology. It also explains how the mobile financial services revolution enabled the government to implement its e-governance strategy to better provide a range of services and opportunities to beneficiaries of public programs, business, taxpayers and investors, as well as dynamizing the private sector.  \nAt the same time, even as it contributes to strengthening state capacity, the digital revolution makes new demands on the state, and the paper outlines several important challenges  \nthat Kenya will need to address in order to further consolidate its success. These include improving connectivity across the country, ensuring a fully interoperable mobile payments platform and implementing measures to strengthen consumer protection. Another important focus for the future is to transition to a fully digital identification (e-ID) system. The thrust of the paper is to provide inspiration and guidance for other countries to use Kenya’s achievements as an example.  \nCGD Policy Paper 154 August 2019  \n[www.cgdev.org](www.cgdev.org)  \nCenter for Global Development 2055 L Street NW Washington, DC 20036  \n202.416.4000 (f) 202.416.4050  \n[www.cgdev.org](www.cgdev.org)  \nDigital Technology and State Capacity in Kenya  \nNjuguna Ndung’u  \nFormer Governor of the Central Bank of Kenya, 2007-2015 [nsnjuguna@ndungu.co.ke](nsnjuguna@ndungu.co.ke)  \nI acknowledge the excellent research assistance of Alex Oguso, PhD Student at the University of Nairobi.  \nThe Center for Global Development is grateful for contributions from the Bill & Melinda Gates Foundation in support of this work.  \nNjuguna Ndung’u, 2019.“Digital Technology and State Capacity in Kenya.” CGD Policy Paper 154. Washington, DC: Center for Global Development. [https://www.cgdev.org/](https://www.cgdev.org/)[ ](https://www.cgdev.org/)[publication/digital-technology-and-state-capacity-kenya](publication/digital-technology-and-state-capacity-kenya)  \nThe Center for Global Development works to reduce global poverty and improve lives through innovative economic research that drives better policy and practice by the world’s top decision makers. Use and dissemination of this Policy Paper is encouraged; however, reproduced copies may not be used for commercial purposes. Further usage is permitted under the terms of the Creative Commons License.  \nThe views expressed in CGD Policy Papers are those of the authors and should not be attributed to the board of directors, funders of the Center for Global Development, or the authors’ respective organizations.  \nContents  \nPreface ................................................................................................................................................ 1  \n1. Introduction .................................................................................................................................. 2  \n2. The Digital Developments that Make Kenya Unique............................................................ 3  \n2.1 The Four Stages of Digitization in the Financial Services Evolution ........................... 3  \n2.2 Implications for the Retail Payments System ................................................................... 5  \n2.3 Innovative Delivery Technologies for Financial Services Have Opened the Frontier of Financial Inclusion ...","cbCaiqnQJNUWNF4E","https://ap.wps.com/l/cbCaiqnQJNUWNF4E","pdf",521327,43,"English","# Preface\n# Introduction\n# The Digital Developments that Make Kenya Unique\n## The Four Stages of Digitization in the Financial Services Evolution\n# Digitization and State Capacity in Kenya\n## Fiscal Policy Design: Revenue Administration and Payments for Services\n# The Challenges of Digital Development: Consolidating the Future of Digitization in Kenya\n## Securing Interoperability of Retail Electronic Payments and Transparent Pricing\n# Lessons from Kenya and the Future of Digitization\n# References","[{\"question\":\"How does M-Pesa’s launch relate to Kenya’s digital technology progress?\",\"answer\":\"The paper argues that M-Pesa’s 2007 success triggered endogenous innovations that shaped Kenya’s digital space and positioned it ahead of other regional developing economies.\"},{\"question\":\"What role did mobile financial services play in Kenya’s government services?\",\"answer\":\"Mobile financial services supported implementation of the government’s e-governance strategy, expanding services and opportunities for public program beneficiaries, business, taxpayers, and investors while energizing the private sector.\"},{\"question\":\"What challenges does Kenya need to address to further consolidate digitization?\",\"answer\":\"The paper highlights improving national connectivity, ensuring a fully interoperable mobile payments platform, strengthening consumer protection, and transitioning to a fully digital identification (e-ID) system.\"}]","Digital Technology and State Capacity in Kenya | PDF",108]