The actual effects were fairly small — maybe 10 cents a day in additional money. But even a small effect was enough to lift households over the extreme poverty line.
Researchers found similar effects in other countries. A paper by Ggombe Kasim Munyegera and Tomoya Matsumoto looked at households in rural Uganda and found a significant uptick in household consumption among households that had access to mobile money.
The mechanism in that case was largely remittances — money sent home by family members living and working elsewhere. Mobile money makes it safer and easier to send money home, and fees are much lower than fees for wire-transfers or postal services — so more money makes it home, and people in rural communities are less likely to go hungry. A paper by Haseeb Ahmed and Benjamin W. Cowan found that mobile money also increases access to health care.
For decades, Suri and Jack point out, the global development community has dedicated lots of effort and energy to programs like microfinance , which are meant to give poor people access to sophisticated financial instruments like long-term business loans.
Instead, the benefit it does have seems to be mostly that it gives people access to the financial system. Thanks to mobile banking, that benefit can be obtained without the overhead and debt burden of microloans. Over the past decade, M-Pesa and competitors have worked to replicate the formula that led to success in Kenya across dozens more countries in Asia and Africa.
Today, M-Pesa says it has 42 million active customers and , agents across seven countries. The Gates Foundation has funded mobile money projects and developed software for mobile money platforms. Private companies have created M-Pesa competitors. One such company is Wave , a sleeker low-fee mobile money app. Disclosure: I know of it because many of my global-poverty-minded friends have worked there. Wave was founded and is run by people who want to bring M-Pesa-like programs to unbanked people in other countries.
Unfortunately, replicating that early success has proven difficult. M-Pesa was exactly what Kenya needed, and it took off there. Despite the country having lots of unbanked people and lots of interest in a better money transfer system, M-Pesa and competitors have failed to get a foothold. In other countries, mobile money systems have been shut down by the government at the behest of central banks or competitors.
And lots of other factors vary, too. One country Wave operates in is Senegal. In Senegal, only 8 percent of the population has access to banks, and only about 8 percent has a mobile money account.
They would rather have mobile accounts than deal with banks. Mobile money, on the other hand? In many countries, initially successful mobile money programs have been brought to a grinding halt by new laws once they got too big, or taxed so heavily that they were unusable for casual transactions. It was a combination of the right technology, at the right time, rolled out in the right way, with the right decisions from the Kenyan government to allow the system without applying onerous regulations or high government fees on every transaction.
There are already banks in the US that are online-only, trying to take advantage of the change in how we do transactions to avoid the high costs of physical branch locations.
And yet, a decade after it first took off, it remains in many places underutilized. The evidence base for it is significantly stronger than the evidence base for popular financial access interventions like microloans. For our research we interviewed M-Pesa users in some of the poorest villages in western Kenya to understand what the service meant to them.
Their stories of deprivation and the effect of M-Pesa were then transcribed into poetic form to best express their feelings towards the service. These suggest that a particular value of M-Pesa lay in freeing women from male financial control and supporting informal business relationships.
Mothers could send money to daughters whenever they got a bit of money. They could stop husbands and brothers blowing the school fees on alcohol. I have three men: my husband, my first two boys; all they do is eat, drink and sleep.
Every morning they are looking for the best liquor. They are my burden, so I will carry it. I use M-Pesa.
I send my daughter money in school. Africa Business Report. Africa Today podcasts. Image source, AFP. However, this is not the case in South Africa. Wrong partner? A few reasons have been cited for its failure. So the challenge in South Africa is not about access. More than half of adult South Africans now have bank accounts. And statistics show this is the trend. The prospects for financial services are good. Related Topics. South Africa Banking.
Published 18 June Published 22 November Published 24 February
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