Guy Stuart and Monique Cohen

October 2011


M-PESA, financial management

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Dry Spells and Shocks: M-PESA as a Financial Management Tool

The success of M-PESA, Kenya's mobile money joint venture between telecommunications leaders Vodafone and Safaricom, is by now well known among those who follow developments in the field of financial services provision for low-income populations. Four years since its 2007 launch, an estimated 13.5 million Kenyans, about 70% of the country's adult population, subscribe to M-PESA. The service processes more transactions domestically in Kenya than Western Union does globally.

Of particular interest to those in the international development field is M-PESA's focus on the lower-income segments. A new study by Microfinance Opportunities (MFO) looked at how M-PESA helps such households work their way out of poverty and mitigate its effects in the meantime. MFO found that M-PESA does not appear to be a tool that low-income people use to accumulate savings, one important path out of poverty. They do use M-PESA as one among numerous tools to patch the holes that routinely spring open in their regular cash flow. But its greater value to such households appears to be in helping them meet emergency expenses, especially hospital bills. Finally, M-PESA plays a unique role in maintaining the "social capital" that can be an important asset for low-income Kenyans.

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