Mobile Money and the Dynamics of Inclusion and Inequality in Kenya

The policy discourse for financial inclusion has deepened in recent years and increasingly anticipates that mobile technologies offer new routes to formal sector access.  This expectation has been heavily fuelled by the huge outreach achieved by mobile money services in Kenya where some 62% of the adult population had access in 2013.  Earlier research suggested that these services were largely complementary to existing formal services.  Regressions analysis on national survey data showed that while age and being male were no longer significant for access, it was positively associated with higher levels of education and formal employment, and despite the implication that it can overcome the problems of distance, it was still negatively associated with rurality.  Moreover, while it is obvious that using the service is positively associated with having a mobile phone, interestingly having a phone had become significant for access to other services also (SACCOs, MFIs and ROSCAs) suggesting that not having access to one – even through other family members or friends is now a key indicator of social exclusion. 

This paper will draw on mixed methods research undertaken in three local financial markets which capture differential livelihood contexts, to examine the way in which mobile money is changing this landscape.  It goes beyond indicators of access to examine the dynamics of use in greater depth using both survey data and in-depth interviews.  Earlier research has suggested that those with access are more able to manage shocks to their livelihoods through the ability to access funds via their social networks.  Moreover, it has been argued that mobile money allows increased inter-personal transfers which facilitate valued social connections with extended family, kinship networks and friends and that these have important affective dimensions which allow for an alternative logic to that of engaging with the formal sector where funds proffered are not reciprocated.  In particular the paper will examine what the evidence suggests regarding changing dynamics of inequality and the relationship of this service to processes of financialization in a developing economy.