A new study has revealed that access to mobile money services has lifted 194,000 Kenyan households out of extreme poverty. Interestingly, female-headed households saw far greater increases in consumption than male-headed households.
"What we saw over six years was impressive," said Tavneet Suri, associate professor of Applied Economics at the Massachusetts Institute of Technology (MIT) and co-author of the study.
Previous studies have looked into the social impacts of Kenyan mobile money services, which allow users to store and exchange monetary values via mobile phone, and have highlighted the ways in which such services can help people save money and weather financial storms.
The new study, however, demonstrates that mobile money services have had notable long-term effects on poverty reduction in Kenya, especially among female-headed households, and have inspired a surprising occupation shift among women.
"Previously, we've shown mobile money helps you with financial resilience. But no one has understood, if you improve resilience, what happens over the longer term. This is the first study that looks at long-term poverty reduction and at gender," said Suri.
The study shows that the impact was most dramatic among single mothers who used the text message-based mobile payment system, M-Pesa. The mobile system gives people, who would otherwise be unable to access traditional services, a simple, reliable and fast way of moving and saving money.
Researchers found that the number of female-headed households living in extreme poverty fell by 22 percent within a one kilometre radius of an area where six new M-Pesa agents opened between 2008 and 2010.
It provides further evidence that mobile phone technology can help to bring financial services to the 80 percent of African women who do not have a bank account. By 2015, more than 270 mobile money services were operating in 93 countries, with an estimated 411 million accounts.
"Sometimes the poor, and poor women in particular, just need access to the right set of simple tools to help themselves," said Annie Duflo, executive director of Innovations for Poverty Action, a research and policy group that took part in the study.
The researchers also think mobile money could give women in male-headed households more financial independence, potentially helping them to start their own businesses.
“As a woman, sometimes you’re not able to save on your own, because cash gets used by the whole house. [Mobile money] allows you to keep separate cash and…manage a source of income on your own,” Suri stated.
Moving forward, the study’s authors now aim to conduct similar research on the impact of mobile money services on poverty in Uganda, Tanzania, and Pakistan to find out if this is just an effect for Kenya or more systematic across other countries.
Kenya’s standing has also improved by 21 places in the latest World Bank ease of doing business report, suggesting that a number of business reforms initiated by the government are paying off. Kenya’s improvement was credited to five reforms in the areas of starting a business, obtaining access to electricity, registering property, protecting minority investors and resolving insolvency.
Learn about innovations in cash-based programmes and best practice to ensure financial inclusion at the 2nd annual Aid & Development Africa Summit on 28 February to 1 March 2017 in Nairobi, Kenya. Hear from over 70 expert speakers including Annalisa Conte, Country Director, World Food Programme (WFP) Kenya, Richard Lankas, Quality Assurance Lead & DBA, World Vision International, Andrew Karlyn, Regional Advisor, Africa, USAID and Jake Harriman, Founder, Nuru Kenya and gain valuable insights regarding data strategy, ICT4D and the use of cash transfers in the emergency context and development programmes.
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