Economist: Kenya’s mobile telephones: Vital for the poor
AFRICA’S “mobile decade”, when telephones at last reached most corners of the continent, has meant a huge improvement in the lives of the poor. But quantifying it is hard. How useful can a mobile phone be to someone living on less than $2.50 a day, the World Bank’s standard benchmark of poverty? Researchers in Kenya have given a partial answer. They find that people will skip a meal or choose to walk instead of paying for a bus fare so that they can keep their phone in credit. ...
... Still, only 16% of respondents said they were using their phones to browse the internet. The real breakthrough in the Kenyan market has been in people’s ability to send and receive money, with more than two-thirds doing so by phone. East Africa’s biggest success has been M-Pesa, a mobile-based money-transfer system pioneered by Safaricom, a leading Kenyan operator. Its simple interface, which works on any phone, has brought financial services to Kenya’s poor majority, enabling the movement of some $8.6 billion in the first half of this year. ...
There has been a big interest in microfinance in recent years. The aim of many organizations was to make loans available to the poor so they could start businesses and foster economic growth. But Daryl Collins, et al., in Portfolios of the Poor: How the World's Poor Live on $2 a Day, show that business formation is not the highest priority for the poor. They had hundreds of poor families in India, Bangledesh, and South Africa fill out diaries recording their financial transactions for one year. What they learned is that the biggest financial challenge the poor have is cash flow management. Money does not come in in a steady stream across the year. Yet if you save up money is very difficult to keep it safe. Having the money readily at hand also makes it harder not to spend. Banking by phone is proving to be a major impact on financial management for the poor. With increased ability to manage finances will also come a greater capacity for entrepreneurial activity.
