For phone users in Kenya: To bank, or to eat?

In Kenya, two-thirds of people, mostly the poor, use phone-based money-transfers. A new report from iHub, a Kenyan tech incubator, is beginning to show that Kenyans are willing to forgo public transit for the day, or skip a meal to be able to use their phone for economic purposes later.

The mobile money service, called M-Pesa, has moved $8.6 billion so far this year, mostly between the country's poor. In areas where public transit is decrepit or unavailable, this financial self-servicing is an incredible amount of grease for the country's commerce and a gateway to economic mobility for the poor. Consider the farmer whose customers may not be able to reach a bank some miles away. Or the worker in the city, who needs a reliable and safe way to send money home.

M-Pesa's penetration does have its costs. iHub's report shows that the sacrifices Kenyans make in order to use their mobile phones average out to about 84 cents a week. This is far from chump change for poor Kenyans. For some, it is a whole day's wages.

There is no doubt that M-Pesa is the most successful mobile payment scheme in the world. Consider how few Americans use mobile payments as compared to the two-thirds of Kenyans that do. The trend of forgoing meals in favor of more mobile data could be set to worsen. The Kenyan government is eyeing M-Pesa for revenue, a reportedly 10% tax on M-Pesa's end-user fees. People have to eat, but do they need to bank?

Via The Economist

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