Mobile banking may not be taking off in all corners of the world, but in Kenya, it is having a significant positive impact, with the use of mobile banking lifting 194,000 or more Kenyan households out of poverty from 2008 to 2014.
According to a Wall Street Journal report that looked at research from economists Tavneet Suri of MIT and William Jack of Georgetown University, the use of mobile phones enables poor countries to provide communications technology without building a landline network and enables them to bypass traditional banks as well. Over the course of the last decade, mobile money has reached the majority of Kenyan households, with around 110,000 so-called “agents” around Kenya operating from small kiosks where cash can be deposited and withdrawn. Once the money is deposited, Kenyans can spend it anywhere in the country. Suri told the paper the kiosks act as debit cards. Mobile lets you “create relationships with people who are much farther away,” she said, noting the average transaction happens between people that are 120 miles apart. Without mobile banking, it would cost $5 in bus fare to deliver the cash, which is a lot of money for most Kenyans.
Another positive impact of mobile money: The researchers found mobile banking largely impacts females in the country, particularly the ones that are the poorest. Suri’s research estimates mobile banking “induced 185,000 women to switch into business or retail” from farming. What’s more, women increased the amount they saved. The report noted Suri’s team is in the process of finishing research studies in Tanzania and Uganda, two countries that have also been adopting mobile banking.