1. Experimenting with mobile money
William Jack
Georgetown University
Based on research with
Alev Gurbuz, James Habyarimana and Tavneet Suri
Africa Growth Forum, 2015
UNCC, Addis Ababa, Ethiopia

2. The problem:
The solution:

3. Customer and Agent growth
2011
2009
2010
Customers
Agents
Customers
2008
Agents
2007

4. Visualizing financial inclusion (Gurbuz)
Excluded
Informal
Formal

5. Financial inclusion in Kenya: 2009

6. Financial inclusion in Kenya: 2013

7. M-PESA as a risk spreading tool (Suri)
Four-year panel survey of 3,000 households,
Negative shocks reduce consumption by about 7% - 10%
But M-PESA users see no fall in consumption
That is, M-PESA users are fully insured

8. Long run effects of M-PESA (Suri)
Can M-PESA change the level of consumption, not just it’s variance?
Possible impacts on:
Occupational choice: farming  business?
Migration: seasonal or permanent?
Use a long-run follow up survey of our sample in 2014 to assess these impacts

9. Mobile financial services
Savings
Credit
Subsidies

10. Savings: High Hopes (Habyarimana)
How can savings be boosted?
Increase salience of saving
Provide information about future costs
Reduce transaction costs
Mobile Money savings account
Reduce temptation
Commitment Savings Account
Increase awareness
Regular text reminders

11. Mobile savings solutions
Lock Savings Account
Interest bearing mobile money bank account
Mobile money transfer service
Additional 1% interest
1-6 month maturity
Goal set
Early withdraws:
Lose bonus interest
48 hour waiting period
1-5% interest
Loan facility

12. Context of our study Three counties in Kenya
Kisumu, Nyeri, Kilifi
Geographic, ethnic, and linguistic diversity
Target parents of final year primary school students
Six month window ahead of transition to high school

13. Design: school-based randomization
Weekly SMS
No SMS
Total
Control 60
120
Mobile bank account
Mobile commitment account
180
360
All groups received information on the importance of saving for high school

14. Sampling and randomization
Kisumu
Nyeri
Kilifi
3 Counties
3 x 120 school meetings
13 without Std 8
2 refused
7 with no parents
338 x ~14 parents

15. School meeting Introduction to High Hopes and consent
Parental engagement
Importance of high school
Thinking about the costs of high school
Encouragement to save
15 minute baseline survey
Treatment administration
Members of T1 and T2 assisted in opening accounts if desired
T2 invited to convert maturity to January 5, 2015

16. { { Timeline Re-contact rate: 88% Primary school exams end
High school starts
2014
2015
July
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr { {
Endline school-based interviews
n = 3,215
Endline invitation letters sent
Lock boxes mature
Jan 5, 2015
Baseline and recruitment
n = 4,713
Endline invitation calls and SMSs
Endline phone interviews
n = 934
Re-contact rate: 88%

17. Baseline summary T1 T2 Control Total Number parents at meetings 1,480
1,631
1,713
4,824
Number who took survey
1,437
1,596
1,680
4,713
97%
98%
Average # respondents per school
13.0
13.6
15.2
13.9
Access granted to M-PESA and M-Shwari data
1,254
1,388
1,485
4,127
87%
88%
Number with M-Shwari at baseline
319
333
389
1,041
22%
21%
23%
Number with LSA at baseline 6 9 11 26 0% 1%

18. M-Shwari take-up
Post-
Post-
Post-
Pre-
Pre-
Pre-

19. M-Shwari opening dates
Control
Treatment 2
Treatment 1

20. LSA take-up
Post-

21. LSA Maturity Dates
January 5, 2015
Control
Treatment 2
Treatment 1

22. Results
Stay tuned

23. Credit (Suri) Sustainable credit requires screening of bad risks
But group-based lending and high deposits can choke off demand
Asset collateralization is rare – especially for small, easy to hide, assets

24. Mobile credit: making credible the threat of repossession
dis
Small solar power units purchased on credit
Cost: $75
Down-payment: $5
Repayment via mobile money
Remote penalties and shut-off both feasible

25. Design Sample: 1,850 small retailers Ex ante assignment Control
I. PAYG
II. Weekly repayments
Ex post assignment
II(a). Full enforcement
II(b). No penalty
III(c). No enforcement

26. Take-up

27. Results Penalties increase repayment somewhat
Even with complete lack of enforcement, many people still repay
Reputations important?
Kerosene use falls – health benefits

28. Subsidies delivered over the mobile network
Maternal health care vouchers and transfers (both conditional and unconditional)
Implemented in rural western Kenya
Meaningful impacts on assisted deliveries
CCTs just as effective as maternal vouchers