Cash In, Cash Out Kenya: The Role of M-PESA in the Lives of Low Income People
This report presents findings from a study that uses the Financial Diaries methodology to examine how low-income Kenyans use M-PESA, an electronic-money (e-money) service. The study examines the value of M-PESA to low-income individuals, likely areas for M-PESA's future growth, and whether M-PESA can serve as a platform for financial services beyond remittances.
The study consisted of 92 low-income respondents from three research sites. Researchers recorded respondents weekly transactions between November 2009 and June 2010, for a total database of more than 18,000 records. The study revealed the continued importance of cash. Findings include:
- E-money's share of transactions was less than 6 percent, compared to more than 94 percent for cash;
- M-PESA is still mainly used to send money home, usually from urban to rural;
- Respondents did not seem to use M-PESA for savings, but the service was an important part of their coping strategies for unusual large expenses.
The study demonstrates M-PESA usage patterns mimic those of cash. It suggests that e-money providers have an untapped potential market in terms of cost and price, provided that they can overcome trust issues.
