Mobile money services, which allow users to store and exchange monetary values via mobile phone, may help lift people in developing economies out of poverty, a new study led by an Indian origin researcher suggests.
The study shows that mobile-money services have had notable long-term effects on poverty reduction in Kenya - especially among female-headed households - and have inspired a surprising occupation shift among women.
The study led by Tavneet Suri, associate professor at Massachusetts Institute of Technology (MIT) in the US, estimates that, since 2008, access to mobile-money services increased daily per capita consumption levels of 194,000 – or 2 per cent - of Kenyan households, lifting them out of extreme poverty (living on less than USD 1.25 per day).
Female-headed households saw far greater increases in consumption than male-headed households, researchers said.
"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.
By 2015, over 270 mobile-money services were operating in 93 countries, with an estimated 411 million accounts.
The Kenyan study shows that mobile-money services are not just conveniences but do, in fact, have a positive impact on people's livelihoods, researchers 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," Suri said.
The study looked at M-PESA, the country's most popular service, which launched in 2007 and has more than 25 million Kenyan users.
Researchers compiled surveys of 1,600 households across Kenya over the years, looking at, among other things, average daily per capita consumption - meaning total money spent by the individual and household - and occupational choices.
They measured the rise in the number of service agents within one kilometer around each household - or "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.
Households where agent density increased by five agents -the average in the sample - also saw a 6 per cent increase in per capita consumption, enough to push 64 (or roughly 4 per cent) of the sampled households above poverty levels.
The World Bank defines spending less than USD 1.25 per day as "extreme poverty," and spending less than USD 2 per day as "general poverty." Mean daily per capita consumption among the sample was USD 2.50.
