Findings from the field: An observation on M-PESA usage during the post-election violence
by Olga Morawczynski: Friday, May 22, 2009
Olga Morawczynski is a doctoral candidate at the University of Edinburgh and has spent more than a year investigating customer adoption and usage in both urban and rural Kenya. Today she begins a series of occasional blog posts based on that work.
During the coming weeks, I will post a series of blogs. These will describe observations made during my fourteen month ethnographic fieldwork. Such fieldwork focused on understanding the adoption, usage and impact of M-PESA in two low-income communities. It began in an informal settlement on the outskirts of Nairobi called Kibera. The money trail was thereafter followed to a small village in Western Kenya called Bukura. This blog will reveal the first observation, which is on usage.
M-PESA flows reversed during Kenya’s political crisis, with rural users sending money to urban contacts.
As I noted in a previous post - “Why has M-PESA become so popular in Kenya?” M-PESA was used predominantly for the transfer of remittances in the two research sites. Usually these flowed from urban centres like Kibera to rural villages like Bukura. However, there was a reversal in such flows during the post-election crises in Kenya. Urban migrants were receiving money and airtime from their rural relatives.
During this period, money and airtime cards could not be physically transported across the country. Many of the roads were blocked by rioting youth, and the railway was dismantled. This was problematic for many of the urban migrants. They needed money to escape the threat of ethnic violence, and airtime to communicate about their situation.
Some of the migrants received such support from friends and relatives in the village, who transferred both money and airtime via M-PESA. Others withdrew cash from M-PESA if they had a balance in their account. Most banks remained closed during the violence, which further made it difficult to access money. Some agents located in urban areas, which were affected by the violence, confirmed this finding. They asserted that the demand for services was high during this period. They further explained that the nature of transaction had changed—urban customers were making withdrawals rather than deposits.
This example highlights one of the major benefits of M-PESA—it reduces spatial and temporal constraints for money flows. Through the temporary conversion of cash into digital form, money can travel almost instantaneously into many parts of the country. In Kenya such reduction is vitally important. Roads are often in poor condition outside of Nairobi, which makes it difficult to transfer money even during periods of stability. Money travelling physically is also at risk of being lost or stolen along the way, either by highway robbers or relatives transferring the cash. Many noted that this was a significant disadvantage of the other money transfer channels.
Next, I will discuss one observation on impact. In particular, I will note how M-PESA users changed their remittance patterns with increased usage.
8 Comments
May 27th, 2009 at 11:22 am, Aiden R ()
this type of technology is good in countries where infrastructure (roads) are bad most times of the year.
May 29th, 2009 at 9:37 am, James Taylor Smith ()
Wow! How long did this last for? Did it happen at any other time?
June 1st, 2009 at 10:35 am, Joseph Ponnou ()
M-PESA has clearly set benchmarks for mobile money transfer companies worldwide. Indeed, lack of banking infrastructure has aided to this growth in usage. While listening to the CEO of M-PESA at MMT-08, one thing he said came through very strongly and I highly appreciate it: “The uptime and success rate of transactions have to be 100% - not a fraction less”. Good luck to all the players in the mobile money transfer and mCommerce industry.
June 2nd, 2009 at 2:54 am, Tonny Omwansa ()
Note that M-PESA has competitors in Kenya. For example ZAP offers a little more features. But several factors have influenced the superior adoption of M-PESA. One of them is effectiveness of campaigns and customer awareness. Michael Joseph did mention during the M-Banking conference in Nairobi that getting the masses to appreciate and adopt such technology takes a lot of effort and resources. It does not just happen. You must also deeply understand the customer proposition.
With over 6 million m-pesa subscribers (about 20% of kenya population), over 10,000 new registration a day and 9,000 agents across the country, circulating millions of dollars, one would expect this money transfer and payment method to become the way of life in a few year time.
The Central bank has given a lot of support, so has the mobile service provider regulator, CCK. It will not be long before appropriate regulation is in place… and greater impact to the society.
Tonny Omwansa.
June 2nd, 2009 at 1:14 pm, Findings from the field: An observation on M-PESA usage during the … | Kenya today ()
[...] Here is the original post: Findings from the field: An observation on M-PESA usage during the … [...]
June 3rd, 2009 at 9:36 am, Edwin Thompson ()
Yes, but I think ZAp has inflated majorly their figures on growth. Nobody sees these guys around Kenya, especially in the rural.
September 18th, 2009 at 3:08 am, Majibu.com // Answers to Life» Blog Archive » Attempts to Write-off Africa at Our Achievements ()
[...] M-Pesa was really popular in Kenya way before the post-election violence, so that did not play the major role described in one of your articles [...]
November 13th, 2009 at 4:37 pm, Vendor Review – Monitise « New Ventures in Financial Services ()
[...] Once investment capital flows into a venture whose business model is “in progress” information concerning its current state is hard to obtain. A top VC constantly reminds me that Google had no plan for revenue when it first started. However, it remains to be seen HOW the highly regulated and highly competitive world of payments will adapt to this “innovation” and invested capital. The complexity and profitability of mobile payments within the emerging market “sector” is further aggravated by new participants: Philanthropic Organizations and NGOs. These groups see tremendous potential in mobile to address financial infrastructure issues in developing markets (CGAP Articles). [...]
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