A story of moral imagination and bold entrepreneurship | Sitoyo Lopokoiyit in conversation with Jacqueline Novogratz

0:00Sitoyo Lopokoiyit: With no fees or minimums on checking accounts, it's no wonder the Capital One bank guy is so passionate about banking with Capital One. If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a week to assist with your banking needs. Yep, even on weekends, it's pretty much all he talks about. In a good way. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. Member FDIC. Investing with Schwab is like spending a Saturday at a great farmer's market. You can fill your reusable tote with a bit of everything.

0:37Sitoyo Lopokoiyit: Maybe you go for some free-range, self-directed investing. Or perhaps you pick up a few farm-fresh trades while you peruse. You can even get help from a dedicated advisor. That's full-service wealth management. Mix, match, and change your mind whenever you want. Because at Schwab, you can invest your way. No matter your goals or appetite for investing, Schwab has everything you need, all in one place. Visit schwab.com to learn more. I think the engine's stalling out on me. Yeah, that don't sound right. Dang, got a lot more miles to go. Nah, be okay, mate. You ride with GEICO Motorcycle Insurance and got their 24-7 emergency roadside service.

1:16Sitoyo Lopokoiyit: They'll be here with a tow in no time. Good, because these boots weren't made for walking. Those riding boots are pretty sweet. Oh, you like? Do you think they come in a size one inch? I don't know. It feels good to ride with help. It feels good to GEICO. Emergency roadside service is optional coverage.

1:35Jacqueline Novogratz: Hello, listeners. Today, we're talking about entrepreneurship and the creativity needed to bring your vision to life. But we're going to do something a little bit different. Instead of a talk, we're bringing you a conversation from TED 2025 that features an entrepreneur whose product I've used and been astounded by its reach. I'm Madupa Akinola. This is TED Business, a podcast from TED. M-Pesa CEO Satoio Lopakoyet currently runs a mobile payment system that's Africa's largest fintech platform, handling more than a billion dollars a day. But beyond highlighting the tremendous success of his company and leadership, he's here on the TED stage to talk to his friend, Acumen CEO Jacqueline Novogratz, about moral imagination.

2:25Jacqueline Novogratz: This idea was central to creating his business, and it still guides him to this day. Then after the talk, I'll have you reflect on the question, what does moral imagination mean to you and your own entrepreneurship? I'll also share what it means to me and the vision I have for 21st century organizations. But first, a quick break.

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4:01Sitoyo Lopokoiyit: With no fees or minimums on checking accounts, It's no wonder the Capital One bank guy is so passionate about banking with Capital One. If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a week to assist with your banking needs. Yep, even on weekends, it's pretty much all he talks about. In a good way. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. Member FDIC.

4:36Jacqueline Novogratz: And now, Satoio Lopakoyot and Jacqueline Novogratz take the TED stage. I am so excited to have this conversation with Satoio for so many reasons, but three that I'll start with. First of all, he disrupted the first two industries I worked in. I started off in traditional banking and then in 1986 co-founded the first microfinance bank in Rwanda, both disrupted by M-Pesa. For the last 25 years, I've been investing in social enterprises focused on solving problems of poverty. And for the last 20, M-Pesa has fundamentally accelerated them. And the second reason is the unexpected. and PESA was founded in Kenya.

5:27Jacqueline Novogratz: What's so extraordinary is this is 2007, which was the year of the iPhone. And when IBM introduced Watson, it was the year of Kindle and Airbnb. And not enough people paid attention to this notion that cell phone banking could be a thing. It would take years before the United States and China took it on themselves. And now when I'm in Nairobi, I can buy a banana or roasted corn on the streets in ways that in New York, often at restaurants, I still can't. I need my credit card. And so it has fundamentally transformed society. The third, which we're going to get to, is the moral imagination. Sitoia and I share a belief that what we need in the world are social entrepreneurs who are using business, grounded in moral imagination.

6:23Jacqueline Novogratz: In other words, they are fundamentally designed from the perspective of those they are here to serve, particularly the overlooked and the underestimated. And M-PESA has done that like very few other social enterprises. So thank you for this conversation.

6:41Sitoyo Lopokoiyit: You're welcome.

6:42Jacqueline Novogratz: And let's start at the beginning, Sitoio.

6:44Sitoyo Lopokoiyit: First, it's great to be here, and apologies for disrupting you twice. I think, you know, in your journey, you've always talked about patient capital. So I think the patience paid off and I think we became good for you. I think for M-Pesa, it started with two insights. And I think that's the DNA of M-Pesa. Before we launched in 2007, we were piloting with a microfinance institution, with a women's only group, which we are trying to give out loans to the women and then see what happens. And what was happening is, for example, you were sending to her the SMS. And in that pilot, that's the first insight we had.

7:36Sitoyo Lopokoiyit: And the second insight that came is a challenge that Kenya had with regards to rural urban migration. So people in the urban areas wanted to send money back home or to the families, to the friends or to do farming, as an example. And the only way they could do that is physical money. So if I wanted to send money to my mother, who is 500 kilometers away from Nairobi, I would write a letter, then put money into it. I'd look at it in the light, just make sure you can't see the money. You give it to a bus driver and then the next day she would go and pick it. And those two insights combined to create our first proposition, send money home.

8:18Sitoyo Lopokoiyit: And that became how, that's how M-Pesa started 18 years ago. And one thing was, how do you ensure that somebody in rural Kenya with very little education or no education can receive an SMS and knows its money? And if it's deleted, she has the confidence that the money is there. Or if she loses her phone, she knows the money is there. So what we did, we built an agent network. And this is a simple mom and pop shop. And we mapped it to Coca-Cola. And in every little village is a Coca-Cola shop. So in every little place, we put M-Pesa agent outlets. And that meant when you receive the money on SMS, you would actually go to an agent and cash it out.

9:08Sitoyo Lopokoiyit: And that builds trust on M-Pesa. And that's how today we have over 700 ,000 agents and we employ directly 1.5 million people in our agent network.

9:25Jacqueline Novogratz: And could you even go beyond jobs, Sitojo, and talk about the overall stats, if you will, and the impacts that M-Pesa has today?

9:40Sitoyo Lopokoiyit: I think first we started with a send money home proposition and then looking at insights, ideas, intensely looking at what customers are doing and we moved to a payment proposition for utilities, water, electricity. Now we've moved into savings, lending, credit, wealth management, international money transfers. Today we connect. You can send money from over 200 countries into Kenya. I can send money. I can bet in this whole audience. I can send money to your bank account directly. It's over 3 billion bank accounts we can send to or to any mobile money platform. And we are connecting families across.

10:26Sitoyo Lopokoiyit: in terms of, let's just say, international money transfer, we've dropped that down from highs of 10 % to 15 % to, right now, we're at SDG level, which is about 3 % from that. And then we moved into the more, you know, the growth area, which is impacting the economy. We're down from governments to the stock exchange, multinationals, Coca-Cola, all these guys run on M-Pesa. And then we've digitized SMEs and micro SMEs.

10:57Jacqueline Novogratz: I want to get into all of this stuff, but I just want to give the high line, which is what? $1.5 billion a day, 60 million customers.

11:05Sitoyo Lopokoiyit: We are shy in saying that the numbers, but it's over$400 billion of value going through the ecosystem. Just.

11:14Jacqueline Novogratz: You're so humble. I'm trying to like.

11:17Sitoyo Lopokoiyit: It's 180 million transactions. In most of our markets, it's between 30 and two markets like Kenya. It's over 60 % of the GDP of the country is flowing through the M-PESA ecosystem. So it's really transformative in terms of, thank you, in Tweet. And in terms of, let's say, just lending, we lend over$50 million a day with NPLs below 3%, which is unheard of anywhere in the world.

11:54Jacqueline Novogratz: so i want to get back to the moral imagination because this is a massive company to go into the office of m and pays a safari com where it's housed is like going into a central bank 60 percent of gdp and there's a lot of security to get it as well um but you started off thinking you would be a non-profit, a true social enterprise that started off with a two million pound grant. And it's a really important point for all the social entrepreneurs in this room and the philanthropists, because we need the right kind of capital to enable people like Citoyo to build markets that have never existed, particularly for low-income people.

12:36Jacqueline Novogratz: And that takes experimentation and failures and starting over again. You've continued with that sense of the moral imagination to see yourselves not just to make money, although you make plenty of money, but to solve social problems and to really understand who your customers are, even though, especially because they might make one or two or three dollars a day. Could you give me some examples of where that has continued to fuel who you are and how you operate?

13:10Sitoyo Lopokoiyit: Yeah, I think for us is every single day I walk into the office, it's like the first day of at work. And I've been in a very, very long time. And it's because we enter there every single day trying to solve real life problems. We look at insights, we innovate around that. So just imagine in Kenya today, There's 6 million visually impaired people, and 1 million people are blind. Now, how do those people who are excluded get to do financial services with dignity? And in 2018, we got to work with a fantastic company from South Korea called the Braille Company, and we built the first Braille.Braille watch for visually impaired people in Kenya.

14:01Sitoyo Lopokoiyit: And that meant that of a million people now can access financial services with dignity. And that DNA of how we create products and services is what we carry on until today.

14:15Jacqueline Novogratz: In a moment of history where we have so little forgiveness, seemingly, something I've learned in 40 years of working in and out of Africa is that quality of forgiveness. And you've integrated that as well. Just in 20 seconds or less, say something about the Financial Inclusion Fund.

14:34Sitoyo Lopokoiyit: So it's about two years ago we created something called the Hasla Fund in collaboration with government. And the government wanted everyone above 18 to have a clean slate. And we worked with them and they removed 9 million people from the Credit Reference Bureau and gave them a fresh start to rebuild that credit. And with that, over 20 million Kenyans got back access to financial services from a clean slate.

15:08Jacqueline Novogratz: We need this kind of thinking today. I want to move to the adjacent possible because M-Pesa has essentially created economic rails, a whole platform on which many other industries can be built. We've seen it in energy and agriculture and healthcare. And just want to have a conversation about how you've seen these adjacencies evolve.

15:32Sitoyo Lopokoiyit: I think this is great. I think when we opened the M-Pesa ecosystem and opened the API, allowed more innovation to come into M-Pesa. And I strongly believe there's more innovation outside M-Pesa than there is in M-Pesa. and the energy or the clean energy example, which you are part of, is an example. I think you should talk a little bit more about that because you've impacted over 300 million people globally with access to clean energy through pay-as-you-go solar systems.

16:00Jacqueline Novogratz: Well, thank you. It's actually an interesting story that needs to be told, especially in the world today as we're looking at so many frontier markets. But the same year that M-Pesa started, a company called D-Lite started with a solar light and this dream of eradicating kerosene. At the time, people had to pay daily for kerosene. Like M-Pesa, they had to build trust, understand the technology, build distribution, et cetera. The big area of friction was financing. And for four years, the company struggled. 2011 and PESA for the first time married mobile payments with off-grid solar electrification.

16:40Jacqueline Novogratz: So now you could bring electricity into your house and pay for electricity the way you used to pay for dirty kerosene, except that you paid it through your phone every day, 50 cents. And if you didn't make your monthly payments by the end of the month, the solar company could call you and maybe offer you grace or shut down your unit. That was game on solar energy revolution because of the railways of M-Pesa. And as Sertoya said, our 40 companies have now brought electricity to 300 million people. It wouldn't have happened without this pay-as-you-go mobile payment system. And that's been just extraordinary.

17:25Sitoyo Lopokoiyit: Yeah, and just what you're saying in agriculture. So we've worked with the Kenya government to digitize the whole fertilizer subsidy program. So they're subsidizing production, not consumption. And through M-Pesa, you get to register as a farmer. You get to put their location, what's your size and what you're planting. And you get information, you get a voucher, you pay on M-Pesa, and government is selling fertilizers directly to its citizen. And today, over$288 million of fertilizer has been sold through the platform. In 2022, there are 1.4 million farmers. Today, there are 6 million farmers on it.

18:07Sitoyo Lopokoiyit: Production is up 39%. Importation of maize is down 23%. And farmers are making a better living. And this accounts from, in agriculture, accounts for 30 % to 40 % of the GDP. And most of that is by small-scale farmers who are between one to five acres of land. And we're impacting and making their lives better.

18:33Jacqueline Novogratz: You've also...

18:37Jacqueline Novogratz: Agriculture is also historically a cash-based industry where there's been a lot of what they call leakage, petty corruption. And you've also significantly reduced that. and through our agricultural investing, we've seen just massive changes. So thank you for that work as well. In the interest of time, because Sitoyo and I share a mentor and someone we have all been imprinted by, one of the great moral leaders of our time, a man named Bob Collymore, who ran Safaricom. And in this time where we keep looking around to say, where are our leaders? Bob stands as a giant that we lost him tragically far too young a few years ago.

19:28See, Toyo, you're an African.

19:32Jacqueline Novogratz: You have built one of the most important companies in the world. You see a continent that is going to comprise one in four of us with a median age of 19. How do you think about AI, the future, Africa's contribution in the context of the kind of moral leadership that Bob demonstrated for us?

20:00Sitoyo Lopokoiyit: Now, first, I think, you know, Africa is rising. You've mentioned the population. It's got 30 percent of it is middle class. That's over 300 million people. and for this continent to continue to succeed, it's open for trade. And that's something that's really important for us. And the part of just understanding what the continent needs is very important. And when you look at AI, I mean, there's fantastic use cases, anti-money laundering, cybersecurity, agriculture, health, and so on and so forth. But for me personally, I think we need to put sort of a handbrake on AI. And the reason for that is we need to open it up, build the algorithms that are relevant to Africa, and not just transport the algorithms there.

20:54Sitoyo Lopokoiyit: Because I strongly feel that if we don't do that, it'll be a form of colonization, colonizing at a scale that we've never seen before. And it is really important that that we manage that challenge from that perspective, because it's like we are racing to a finish line that's vanishing. And for Africa, we need to ensure that the solutions that are brought in make an impact to the lives of the people on the society in which we operate in. And that's very important to me. And for the leadership part, I think I take from Bob, but he used to quote Dr. Seuss all the time and say, the person is a person no matter how small.

21:41Sitoyo Lopokoiyit: And that's such a profound statement that we should be able to look at everybody individually and actually listen to them and try and make an impact in their lives.

21:56Jacqueline Novogratz: I think that's a great note to end on. also that corporate CEOs like Bob, like you, my friend, Sitoyo, have a role to play in the world today to stand up for those who are overlooked, underestimated, and who we desperately need to be realizing their human potential. And it is such an honor to know you, to work with you, to be accelerated by you. Thank you. Thank you very much. Thank you.

22:32Sitoyo Lopokoiyit: With no fees or minimums on checking accounts, it's no wonder the Capital One bank guy is so passionate about banking with Capital One. If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a week to assist with your banking needs. Yep, even on weekends, it's pretty much all he talks about. In a good way. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. Member FDIC.

23:27Sitoyo Lopokoiyit: Wanted to be part of a community with other TED Talks daily listeners or hear more from TED speakers? Becoming a TED member gets you closer to the ideas you love and supports TED's nonprofit mission to activate those ideas for a brighter future. Join our community to spark real world change and get exclusive access to virtual events with speakers like author Ann Patchett, astronaut Chris Hadfield, social scientist Jonathan Haidt, and many more. Learn more and become a member today at TED.com slash join.

24:24Jacqueline Novogratz: Just as we heard, a business guided by moral imagination is fundamentally designed from the perspective of those they are here to serve, particularly the overlooked and the underestimated. I took this to mean that moral imagination is about dreaming big and creating an organization that at its foundation is focused on those whose needs have been long neglected. But moral imagination to me also means focusing on the unmet needs of those inside the organization. This might seem obvious, but I can't tell you the number of times people I teach, mentor, and advise say that they don't feel comfortable bringing their full selves to work.

25:07Jacqueline Novogratz: Dreaming big to me means that at its foundation, organizations will respect the need of all employees to belong, to be seen, to be included, to be appreciated. I believe that meeting this need will naturally then spill over to people outside of the organization whose needs have been long neglected. So what's your definition of moral imagination? How does it translate to your life, your line of work? Where's an area where you feel it at play in your decision-making? And what's an area that could use more of that sense of possibility or intention? After listening to this conversation today, I think these are the questions we should be asking ourselves while challenging ourselves to dream bigger and better.

25:56Jacqueline Novogratz: That's it for today. TED Business is part of the TED Audio Collective. This episode was produced by Hannah Kingsley Ma, edited by Alejandra Salazar, and fact-checked by Julia Dickerson. Special thanks to Maria Ladias, Farrah DeGrunge, Daniela Ballarezzo, Tansika Sangmanibang, and Roxanne Heilash. I'm Madupa Akinola. Thanks for listening.

26:19Sitoyo Lopokoiyit: Thank you. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. Member FDIC. If you've got a teenager, it's time to have the talk. You know, about investing. With the new Schwab Teen Investor account, teens can gain hands-on investing experience and build positive money habits. It's an account co-owned by you and your teen, so you can monitor and engage with the account while your teen learns how to invest and manage money. Learn more at schwab.com slash teen.

27:47Sitoyo Lopokoiyit: Subscribe today at TED.com slash business news.