Mobile money services have had a positive impact on Kenyans lives increasing daily per capita income consumption levels of up to 194,000 Kenyan households, in the process reducing poverty levels, a new MIT study reveals.

The study, which was conducted by Tavneet Suri, associate professor at the Massachusetts Institute of Technology (MIT), estimates that since 2008, mobile money services, which allow users to store and exchange monetary values via mobile phones, may have had a role in lifting low income households in developing economies out of poverty.

The study, titled 'The long-run poverty and gender impacts of mobile money', was published in the journal Science, and showed that mobile money services have indeed had notable long-term poverty reduction in Kenya, especially among female headed households, with a shift in occupations among women the most apparent result.

Up to 185,000 women have since moved from farming to business-related occupations from 2008 when the study was initiated, the study indicates, adding that female-headed households saw far greater increase in consumption than male-headed households.

"Previously, we've shown mobile money helps you with financial resilience. But no one has understood, if you improve resilience, what happens over the longer term. This is the first study that looks at long-term poverty reduction and at gender," said Suri, who collaborated with William Jack, an economist at Georgetown University on the study.

By 2015, more than 270 mobile money service providers were operating in 93 countries with an estimated 411 million users.

The Kenyan study is important because it shows that mobile-money services are not just conveniences but do, in fact, have a positive impact on people's livelihoods, Suri said.

"[That] can be useful for regulators trying to figure out if they want to allow it in their country, or whether someone wants to start a service in their country as an entrepreneur," said Suri.

... Basic financial services such as the ability to safely store, send, and transact money – taken for granted in most advanced economies, and which in the form of mobile money have reached millions of Kenyans at unprecedented speed over the past decade – appear to have the potential to directly boost economic well-being. The Long-Run Poverty And Gender Impacts Of Mobile Money

The study looked at M-PESA, Kenya's most popular mobile-money service with more than 25 million users, which was launched by Safaricom, Kenya's largest telecommunications service provider, in 2007.

There are more than 120,000 M-PESA agents across the country who handle deposits and withdrawals.
The researchers surveyed 1600 households across Kenya over six years, looking at among other things average daily per capita consumption, reflecting total money spent by the individual and household.

Instead of looking at the number of individuals using M-PESA, the researchers measured the rise in the number of service agents within 1 kilometer around each household - "agent density" - during early rollout of the mobile-money services. They then compared the consumption and occupation, and other outcomes, of households that saw relatively large increases of agent density, with those that saw no increases or much smaller ones, over the years.

Not surprisingly, households where agent density increased by five agents, the average in the sample, also saw a 6 percent increase in per capita consumption, enough to push 64 (or roughly 4 percent) of the sampled households above the poverty line. The study used the World Bank definition of poverty, where households spending less than $1.25 per day are categorized as "extreme poverty," and those spending less than $2 per day are classed as "general poverty" households.

The mean daily per capita consumption among the sample was $2.50.

Indicators on why M-PESA causes increase in per capita consumptions and shifts in occupation remain uncertain, Suri says. However, she reckons that more secure storing of money leads to better financial management and savings especially among women.

The researchers also think mobile money could give women in male-headed households, who are also usually secondary income earners, more financial independence, which could help them start their own businesses. "As a woman, sometimes you're not able to save on your own, because cash gets used by the whole house. Mobile money however, allows you to keep separate cash and manage a source of income on your own," Suri says.

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