Same Ends, Different Means: The Role of Social Networks in Shaping M-PESA Use

This brief is based on a study "Cash In, Cash Out Kenya: The Role of M-PESA in the Lives of Low-Income People" published by Microfinance Opportunities (MFO). The brief examines whether Kenyans’ use of M-PESA is embedded in pre-existing social relations or whether it fosters the creation of new ones. The MFO study uses the financial diaries methodology and data from more than 18,000 transactions records collected from almost 100 participants over the course of eight months, showing with whom people exchanged e-money versus with whom they exchanged cash.

The study reveals that Kenyans’ use of M-PESA follows patterns that are largely determined by users’ networks of social relationships. Findings indicate that M-PESA subscribers:

• Currently use M-PESA in ways that mimic their use of physical cash, despite e-money’s potential to alter the way people pursue their economic lives in more fundamental ways;
• Convert e-money into physical cash quickly, often the same day they receive M-PESA remittances;
• Use M-PESA in a way that remains deeply embedded within their familiar economic behaviors and pre-existing interpersonal networks.

The study suggests that cash remains king, despite M-PESA’s meteoric growth. M-PESA will have to expand into other markets segments if it is to challenge the dominance of cash in the everyday economic lives of low-income Kenyans.