Competing Visions of Financial Inclusion in Kenya: The Rift Revealed by Mobile Money Transfer

This paper investigates the rise of money transfer services over mobile telecommunications platforms by examining the financial practices of low-income people and in particular the social relational dimensions of debt that underlie these mobile money transactions. The research was conducted by analyzing the difference in the behavior of low-income people who used mobile money in comparison to those who used two other services: informal financial groups and banks. Three towns in Kenya: Mathira, Nyamira, and Kitui were selected for the study. Supply-side research involved interviews with managers or their representatives of 59 service providers covering banks, savings and credit cooperatives (SACCOs), microfinance institutions (MFIs), and other NGOs or companies offering or facilitating group-based approaches. On the demand side the methods used were both quantitative and qualitative. The paper covers the following sections in detail:

• Emerging literature on mobile money transfer and related literature from experimental and behavioral economics research on how to design products to encourage savings;
• Research methodology, context, and scope of research;
• Overview of the financial landscape in Kenya;
• Analysis of the services provided and the behavior of customers of mobile money transfers, informal financial groups, and banks with a focus on social relations and negotiability.