Abstract:
With most households in rural Kenya dependent on meagre wages from
manual labor, the task of balancing immediate family needs with long-term financial
goals is usually a difficult task, which in most cases leave families with minimal or
no savings. This paper articulates a study to investigate the potential of using mobile
money accounts as a money management platform that can help promote a savings
culture as well as establish and nurture financial discipline among poor households
in Kenya. Based on the premises that 41% of Kenyans do not save regularly because
they do not have “enough money to live on let alone save for a rainy day”, the study
examined innovative ways in which poor households could use mobile money
accounts as a tool for financial inclusion, achieving household financial security, and
enhancing family role performance. The study took place in Nairobi’s Mathare slum.
It aimed to understand, in depth, mobile money savings accounts usage among poor
households. Key informants were low income traders, who earns a daily income of
less than two dollars (about 200 Kenya Shillings). Data was collected using a
questionnaire, informal conversations and contextual interviews and supplemented
by in-depth interviews with managers from a leading mobile money service provider
and the mobile money provider commercial banks. The study results indicates that
lack of awareness on the available and affordable mobile money savings products,
low interest rates on mobile money fixed deposit savings accounts and high
transaction costs when making mobile money payments impacts negatively on
mobile money fixed deposit savings accounts usage while availability of microcredit
on mobile money savings accounts has a positive effect on the usage. The study
provides policy and technology design recommendations that could aid in mobile
money lock savings accounts acceptance.
Description:
A Conference presentation by Dr. Patrick Wamuyu, a Lecturer in the School of Science and Technology at USIU-Africa, during the IST-Africa 2016 Conference