Promoting Savings among Low Income Earners in Kenya through Mobile Money

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.