2 years ago
Advocates of mobile banking have long championed it as an effective way to combat poverty. Now there is longterm research that appears to confirm as much. Economists at MIT and Georgetown reported that M-M-Pesa—short for “mobile money” in Swahili—helped elevate 194,000 families from poverty in Kenya between 2008 and 2014. (That’s approximately two percent of households for the African nation, which has a population of roughly 47 million.)
David Z. Morris explored some of the benefits of mobile banking for Fortune. He writes that the study suggests that Kenya’s approach to mobile banking
“… makes it easier to weather financial or health crises, both by increasing savings rates and allowing users to tap wider support networks. The effect was particularly pronounced for women and female-led households, which previous analysis has attributed to mobile banking’s tendency to give women more power in typically patriarchal societies.”
Beyond this, there are greater economic benefits for society as a whole: It’s believed that mobile banking has increased “the efficiency of the entire Kenyan economy.” There’s also encouraging news suggesting mobile banking will spread to other nations in need. M-Pesa operator Safaricom reported profits of $234 million in the last six months, with M-Pesa generating roughly a quarter of total revenue through the small fees paid by users. In short: Mobile banking seems to be both beneficial and profitable.
Making it easier to transfer money is particularly important, because relatively small sums can make a radical difference in regions besieged by poverty. (Business Insider recently reported on a Kenyan woman whose life was transformed through three money transfers totaling just $1,000.)