1. IMTFI Research 2012 The Impact of Pure Mobile Micro-financing on the Poor Tonny Omwansa & Tim Waema University of California, Irvine 5-7 December, 2012

2. Agenda MUSONI Objectives Approach Preliminary findings Preliminary conclusions Way forward

3. MUSONI Musoni (‘M’ for Mobile and ‘Usoni’ for future or Mobile Future), see http://www.musoni.eu/index.php/media/vid eos The first MFI in the world to go 100% mobile Cash-lite operations, but not branchless Customers loans guaranteed within 72 hours Benefits: lower risks, less paper work, better customer service, easier and more accurate transaction tracking 2.5 years old, over 18,000 loans issued, 8,000 clients Uses M-Pesa [our definition of MM]

4. Objectives To establish how the clients gauge the socio-economic impact of utilizing technology-based financial services and if it drives them to consider using less cash in other transactions To establish and quantify the impact of cashless mobile micro financing on the lives of the poor clients, including the apparent shift from cash to e-money

5. Approach Component of the capability approach (conceptual framework): Quant: Obtained 245 acceptable questionnaires back Qual: Will be doing FGDs and IDIs Final Report Final Report Quant Data Qual Data Progress Report Progress Report Design & Piloting Aug 2012Oct 2012Dec/Jan Feb 2013

6. Demographics Total of 245 respondents from 34 groups Age Min age – 21 Max age - 63; Education High school - 45% Primary school - 27% Marital staus Married – 78% Single – 21% Gender Male – 45% Female – 55%

7. Preliminary findings

8. Source of loans

9. Membership of MFI Member of more than one MFI before joining Musoni? 44% Member of other MFI after joining Musoni? 18% Drop possibly attributed to Musoni’s motto: “Musoni is best”, “I don’t need another MFI”

10. Why choose Musoni?

11. Other common reasons for choice Cheap/affordable Easy to access credit The loan interest is low Good Service Very efficient Convenient Faster to get credit Quick response Cheap/affordable Easy to access credit The loan interest is low Good Service Very efficient Convenient Faster to get credit Quick response Musoni Mpesa

12. Using M-Pesa for loans is better than cash because: That they see it as “Money Saving” is significant

13. Being a cash society, this is substantial What makes you prefer Musoni over other MFIs?

14. Which statements are true about using M-Pesa for loan Value for mobile money is well appreciated

15. I keep money in M-Pesa for other uses besides loan repayment

16. To many, M-Pesa serves to store small amounts of money Avg: $40 How much money do you keep in Mpesa?

17. Which of these services do you use? MM has multiple usage, beyond loan repayments

18. The desire to go cash-less is clear If I it was possible, I would do all transactions in:

19. What do you do when you receive your loan money through M-Pesa?

20. The 26% are interested in credit history offered by bank or lower ATM withdrawals (compared to M- Pesa) Do you send some of the loan to the bank via Mpesa?

21. Why do you change Mpesa back to cash? The two main barriers

22. Since I began using Musoni services: Confirms impact of cashless mobile micro financing

23. Why do you retain money in Mpesa? Confirms need for services beyond money transfer, safety of Mpesa, …?

24. I will not change to any other MFI if it does not use mobile phones

25. Key conclusions There is evidence of appreciation of the impact of cash-lite There is desire to shift to cash-lite There are barriers for BoP to make the shift –Notably societal dependence on cash –Transaction cost for electronic money Pegging mobile money to a product used by BoP makes it easier for them to appreciate cash-lite! –They need to experience MM over time to appreciate –Is that why Safaricom launched m-shwari?

26. Going forward… Several focus group discussions with clients In-depth interviews with loan officers In-depth interviews with management Comparison with a few non-Musoni clients