Examining the adoption and usage of m-banking in Kenya: The case of M- PESA Olga Morawczynski The University of Edinburgh, UK

Introducing M-PESA M-banking application introduced in March 2007 by Safaricom Targets unbanked and pre-paid segment Allows for various transactions: – P2P transfers, deposit and withdraw, check account balance, top-up mobile phone, pay bills 9 billion Ksh + transferred Nearly 2 million users (36.9 million population) agents

What explains the rapid growth rate of the M-PESA application?

The multi-sited study: From slum to village 6 months in Kibera (slum) 3 weeks in Bukura (village)

The multi-sited study: Introducing Kibera One of the largest slums in Africa 60% of population (1 million) in Nairobi live in Kibera 17% employed in formal sector Poor social amenities No formal financial institutions – 7 M-PESA agents

Small village in Western province—one of the most impoverished regions in Kenya Many depend on subsistence farming No formal financial institutions – 1 M-PESA agent The multi-sited study: Introducing Bukura

The slumThe village Number of daily transactions* * Customer base* Mostly young men* Mostly women and retirees Nature of transactions* Mostly deposits-using M- PESA to send money * Top-up mobile phone * Check balance * Store money * Mostly withdrawals-using M-PESA to receive money * Top-up mobile phone * Check balance * Store money Busiest time of year* End month * Beginning of school term * End month * Beginning of school term * Planting and harvesting season Reasons for adoption and usage * Cost, speed of transfer, availability * Suggested by relative in the city, availability, speed of transfer Barriers to adoption and usage * Problems with M-PESA system * Cash float of agents * Technological literacy * Problems with M-PESA system

Explaining adoption and usage Circular migration between city and village Urban-to-rural remittances

Explaining adoption and usage Remittances are sent by urban migrants to maintain relations with the rural area – Structure of family: wives and children remain in the village as men migrate to the city – Inheritance of land: males inherit and invest in the ‘shamba’ – Ideas on the ‘home’: retire and are buried in the village

Explaining adoption and usage These relations are vitally important for both sides: – For the urbanites- contact with the rural helps them to survive in the city. It provides economic and emotional security. – For the villagers- depend on those in the city to meet basic needs and purchase farm inputs.

Lessons Success of M-PESA: it fits into already existing patterns of urban-to-rural remittances – Factors such as cost and availability must also be considered Remittance patterns exist because urban-rural relations need to be maintained Such relations are vital for the well-being of both the villagers and the urbanites Would M-PESA work the same in other contexts?

The future Will remittance patterns change because of M-PESA? How will this impact urban-rural relations?

Asante sana Olga Morawczynski