The Effect of Mobile Money on Saving and Money Transfer Practices for Low-Income Earners in Kenya

Abstract

The mapping of the alternative value storage and saving methods is important in providing insights on the impacts of mobile money on saving practices, how people navigate their available payment choices now, and in what ways these practices are shifting. This study sought to find out whether the introduction of mobile money has been accompanied by a significant shift in saving and money transfer practices used by low-income earners in Kenya. The study surveyed 750 households across Kenya and found that the introduction of mobile money has been associated with an increase in the number of low-income earners saving their money with formal banks and saving and credit co-operatives and a significant shift away from the practice of saving money by hiding it houses. The practice of storing wealth in non-monetary forms was however unaffected by the introduction of mobile money in rural areas. Also, unaffected is the hawala type method of money transfer in rural areas of Northeastern Kenya. Other methods of money transfer experienced a significant decrease in usage amongst low income earners after the introduction of mobile money.