The Economic Impact of Mobile Banking: The case of M-Pesa in Kenya

Abstract

The M-Pesa banking program has changed the way Kenyans view financial access. The program was introduced in 2007 to help increase financial access to the majority of Kenyans that did not have bank accounts. The program currently serves over 20 million users. It is provided by the telecommunication company Safaricom; a subsidiary company of the Vodafone UK company. M-Pesa serves as a store of value, means of payment and way to send and receive remittances. Through these functions Kenyans have been able to increase their wealth, create job opportunities and reduce gender inequality. The paper researches the history of M-Pesa and the impacts of M-Pesa on Kenyans and the Kenyan economy. The empirical research conducted in this paper used a survey panel of users from 2008 to early 2010. The major finding of the empirical research was that Kenyans enjoy a 40% increase in wealth for users and a 36% increase in wealth for the newcomers in the M-Pesa program. The research provides more quantitative evidence on the positive impacts of M-Pesa.