Competing visions of financial inclusion in Kenya: the rift revealed by mobile money transfer

ABSTRACT

Financial inclusion policy has been ignited globally by the rise of money transfer services over mobile phones led by the example of Kenya. This article examines the financial practices of low-income people and the social relational dimensions of debt that underlie these transactions, and contrasts these with widely used services of informal groups and banks’ services. This highlights a “fiduciary culture” where relationships of equality and “negotiability” dominate in contrast to a tendency towards hierarchical relations with banks. This questions policy-makers’ expectations that mobile money transfer will seamlessly facilitate engagement with the formal sector for savings and credit.

RÉSUMÉ

Les politiques d’inclusion financière ont été stimulées à l’échelle mondiale par la montée des services de transfert d’argent par téléphones mobiles. Cet article examine les pratiques financières des personnes à faible revenu et les dimensions sociales relationnelles de la dette qui sous-tendent ces transactions et il les compare avec celles qui sont propres aux services largement utilisés par des groupes informels et aux services bancaires. Cette comparaison met en évidence une « culture fiduciaire » où les relations d’égalité et de « négociabilité » dominent, contrairement aux relations hiérarchiques établies avec les banques. Nos observations remettent en question les attentes des décideurs selon lesquelles le transfert d’argent par téléphone portable facilitera le passage de l’épargne et du crédit vers le secteur formel.

KEYWORDS:

• Financial inclusion
• microfinance
• mobile money
• Kenya
• Africa

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Acknowledgements

I am particularly grateful to those people and organisations who willingly contributed their experience and insights. I also gratefully acknowledge comments on previous drafts from Haroon Akram-Lodhi, Keith Hart, Amrik Heyer, Radha Upadhyaya and Richard Williams.

Notes on contributor

Susan Johnson is Associate Professor in International Development and Director of the Centre for Development Studies at the University of Bath. She has researched and published extensively in the field of microfinance and financial access, with a particular interest in the embeddedness of the economy and markets in social relations.

Notes

1 Financial inclusion refers to a state in which all working age adults have effective access to credit, savings, payments and insurance from formal service providers. Effective access involves convenient and responsible service delivery, at a cost affordable to the customer and sustainable for the provider, with the result that financially excluded customers use formal financial services rather than existing informal options” (GPFI and CGAP n.d., 1).

2 The data were collected on the basis of confidentiality. They are the property of Financial Sector Deepening (FSD) Kenya.

3 These codes refer to individuals from whom the data were collected. The three-figure household codes 100–300 are for individuals from Mathira, 400–600 are for those from Nyamira and 700–900 are for Kitui. The figure after the “/” is 1 for the household head and 2, 3 and 4 for other respondents. Where 1 is the male household head, 2 refers to the spouse.

4 Multiple responses were allowed.

5 In the wake of the 2008 post-election violence, Equity's opening of a branch in the home district of the opposition leader Raila Odinga was particularly symbolic in seeking to heal the political divide. Accessed 21 March 2012. http://kenyapolitical.blogspot.co.uk/2008_05_01_archive.html

Additional information

Funding

I am grateful to the Financial Sector Deepening Trust, Kenya, for funding this research.