photo courtesy of Olga Morawczynski

Last month, I described an observation on usage that came from my ethnographic fieldwork. I noted that money flows reversed during the post-election violence in Kenya. That is, urban migrants were receiving money and airtime from their rural relatives. M-PESA has also generated a variety of impacts to the daily lives of its users. One of the most significant will be described in this week’s blog. That is, changing remittance patterns.

Users began to make transfers “in bits”, remitting smaller amounts of money more frequently.
A significant change to remittance patterns was noted during the fieldwork, especially during the latter stages. Money was being remitted “in bits”. That is, smaller amounts of money were being sent with greater frequency. A shoe maker in Kibera explained:

“Before M-PESA, I used Posta [post office] and would transfer money at month-end. Now I send the money in bits. I send every week. Sometimes I send twice in a week. It is cheaper for me to send with M-PESA…so I can send more times.”

Other urban migrants confirmed this finding. They gave two main reasons for such a change. Firstly, M-PESA was more accessible than the other money transfer options. There were no formal financial services within Kibera, but over 40 M-PESA agents. Money could also be sent from anywhere, and at anytime, as long as a balance was maintained in the M-PESA account. As was noted by one migrant, “M-PESA never closes”.  M-PESA was also less expensive than the other money transfer services. For example, sending 1000 Ksh through M-PESA was 27% cheaper than the post office’s PostaPay, and 68% cheaper than sending it via a bus company.

Some urban migrants increased their money transfers significantly since adopting M-PESA. Sylvesta, a security guard in Kibera, sent money home 15 times during the period of one month. He explained that he did so because his family was large. He had two wives, eight children, nine siblings and countless in-laws.  The rural recipients confirmed that they were receiving more frequent transfers of smaller value. Most further noted that such a change had beneficial outcomes. It resulted in an increase in their total income inflows.  The shoemaker’s wife in the village, for example, explained that she was receiving between 400-500 Ksh more per month since she adopted M-PESA. She noted that such an increase was vitally important—remittances constituted a substantial part of her household income.

In my next post, I will provide a lesson for financial service providers and development practitioners who are developing an m-banking application. In particular, it will note the importance of establishing trust with customers before introducing the application.