Financial stability and the mobile phone
m-pesa
Quick Facts:
- Only four million Kenyans have bank accounts, while 10 million people or 23% of the population use M-PESA.
- M-PESA is a service that allows Kenyans to manage their money solely through a mobile phone.
- Because the service is so popular and effective, many countries have attempted to model their own mobile phone money transfer services after M-PESA.
- There are 17,000 M-PESA agents in Kenya alone.
How does it work?
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Why is it so effective?
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Kenyan TV commercials promoting M-PESA
M-Pesa and Farming?
Poor farmers are often unwilling to spend more money on seeds and fertilizers that may increase their crop yield, with the fear that their crops will fail and they will be hit financially even harder. In an effort to encourage farmers to make this investment, M-PESA has paired up with Kilimo Salama and UAP Insurance of Kenya. Kilimo Salama is an organization that has created solar powered weather stations. These weather stations are used to track weather changes. Farmers purchase bags of seeds and fertilizers and pay an additional 5%, paying into insurance in the case of crop failure. These bags have bar code labels, which are scanned and the farmer is sent a receipt to their phone through M-PESA. If the weather stations predict bad weather, which is likely to lead to crop failure, the farmers receive compensation through M-PESA. In this way, farmers are encouraged to work toward experience economic growth without risking terrible failure. The below video explains the system and interviews a farmer, who has benefited from the system.
Where else is it being used?
The company Roshan has brought a similar system to Afghanistan called M-PAISA.
Citations:
Matthews, Ian . Kiva, "Mobile transactions: The power of moving money by phone." Last modified March 13, 2012. Accessed November 8, 2013. http://www.kiva.org/updates/kiva/2012/03/13/mobile-transactions-power-of-moving.html.
Chatterton, Johnny. "What is Mpesa? How does it work? How did it start?." Our Mobile World (blog), January 1, 2012. http://ourmobileworld.org/post/35349373601/what-is-mpesa-how-does-it-work-how-did-it-start (accessed December 3, 2013).
OXFAM, "African techno-euphoria and the origins of Kenyan mobile exceptionalism." Accessed December 13, 2013. http://www.oxfamblogs.org/fp2p/?tag=mobile-phones.
Matthews, Ian . Kiva, "Mobile transactions: The power of moving money by phone." Last modified March 13, 2012. Accessed November 8, 2013. http://www.kiva.org/updates/kiva/2012/03/13/mobile-transactions-power-of-moving.html.
Chatterton, Johnny. "What is Mpesa? How does it work? How did it start?." Our Mobile World (blog), January 1, 2012. http://ourmobileworld.org/post/35349373601/what-is-mpesa-how-does-it-work-how-did-it-start (accessed December 3, 2013).
OXFAM, "African techno-euphoria and the origins of Kenyan mobile exceptionalism." Accessed December 13, 2013. http://www.oxfamblogs.org/fp2p/?tag=mobile-phones.