M-PESA and Financial Inclusion in Kenya: Of Paying Comes Saving?

Sustainability, Vol. 11, Nr. 3, 2019, 568

26 Pages Posted: 26 Feb 2019 Last revised: 28 Feb 2019

See all articles by Leo Van Hove

Leo Van Hove

Vrije Universiteit Brussel (VUB)

Antoine Dubus

ETH Zürich

Date Written: January 22, 2019

Abstract

Mobile financial services such as M-PESA in Kenya are said to promote inclusion. Yet only 7.6 per cent of the Kenyans in the 2013 Financial Inclusion Insights dataset have ever used an M-PESA account to save for a future purchase. This paper uses a novel, three-step probit analysis to identify the socio-demographic characteristics of, successively, respondents who do not have access to a SIM card, have access to a SIM but do not have an M-PESA account, and, finally, have an account but do not save on it. We find that those who are excluded in the early stages are predominantly poor, non-educated, and female. For the final stage, we find that those who are in a position to save on their phone — the phone owners, the better educated — are less likely to do so. These results go against the traditional optimistic discourse on mobile savings as a prime path to financial inclusion. As such, our findings corroborate qualitative research that indicates that Kenyans have other needs, and want their money to circulate and ‘work’.

Keywords: Financial Inclusion, Saving, Mobile Financial Services, M-PESA, Kenya

JEL Classification: I3, D14, E42

Suggested Citation

Van Hove, Leo and Dubus, Antoine, M-PESA and Financial Inclusion in Kenya: Of Paying Comes Saving? (January 22, 2019). Sustainability, Vol. 11, Nr. 3, 2019, 568, Available at SSRN: https://ssrn.com/abstract=3331605

Leo Van Hove (Contact Author)

Vrije Universiteit Brussel (VUB) ( email )

Department of Applied Economics (APEC)
Pleinlaan 5
Brussels, B-1050
Belgium
+32 2 614 84 49 (Phone)

HOME PAGE: http://research.vub.ac.be/applied-economics/members

Antoine Dubus

ETH Zürich ( email )

LEE G104
Leonhardstrasse 21
Zurich
Switzerland

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