How M-PESA Was the Catalyst for Fintech

In our space, M-PESA has made a big impact in bringing banking type services to the underbanked in Kenya.

Many point to M-PESA as one of the proof points that innovations in banking can be done.

I came across this 2012 study by Danielle White, a graduate student, who looked into the economic benefits brought to women in Kenya. Where most do high level studies from afar, Danielle kept to the ground by focusing on women who worked in one of Kenya’s fishing centres, Lake Victoria.

In this post I’ll summarize the key findings from this study:

  • Saving money in a safe place
  • Ability to save for costly purchases
  • Saving time and money on transport
  • Increased profit margins on their businesses
  • Educational opportunities to empower communities

Saving Money in A Safe Place

Since banks are far away from people, M-PESA provides a safe place to save their money. Many of the women used to save their money at home where it could quite easily be stolen.

In addition, sometimes husbands would steal their wive’s money to buy alcohol or personal items which prevented the women from processing their fish the next day.

Ability to Save for Costly Purchases

Keeping their money in M-PESA as opposed to home created friction from the women spending it. As a result they were able to immediately improve their lives.

All but one woman interviewed stated that they spent their savings on their families or in expanding their business. This included (1) sending their kids to school, where before they couldn’t afford it, and (2) constructing more durable homes, saving costly repairs that often occurred in their old places.

Saving Time and Money on Transport

Many of the women had family members who did not live near their work but yet had to support. Without M-PESA, the women would have to not only take time away from work, they would need to pay for their transportation to bring money safely to a sick father.

Over the course of a year, the women said it would have cost 26x as much to send funds without MPESA.

Increased Profits on their Business

Before M-PESA, these women would have to travel with their fish to sell and collect the money. It used to take one full week to sell two bags of fish. With M-PESA, they were able to send the fish by public transport and get paid immediately by customers. This means faster payment and no personal travel costs.

In addition, with more profits they were able to build fishing boats and increase their yield.

Educational Opportunities to Empower Communities

The time M-PESA saved allowed women to attend conferences and seminars to get better educated. One woman became her local leader and taught others about maternal health, business strategies and female empowerment. The domino effect is something that would make Abundance writers Peter Diamandis and Steven Kotler proud.

I encourage everyone to read this study to get more details. It brings together the message of why many people in Fintech have chosen to enter the space. What other ground level benefits from M-PESA do you see?