IMTFI Research 2012

The Impact of Pure Mobile Micro-financing on the Poor

Tonny Omwansa & Tim WaemaUniversity of California, Irvine

5-7 December, 2012

Agenda• MUSONI• Objectives• Approach• Preliminary findings• Preliminary conclusions• Way forward

MUSONI• Musoni (‘M’ for Mobile and ‘Usoni’ for future

or Mobile Future), see http://www.musoni.eu/index.php/media/videos

• The first MFI in the world to go 100% mobile• Cash-lite operations, but not branchless• Customers loans guaranteed within 72

hours• Benefits: lower risks, less paper work,

better customer service, easier and more accurate transaction tracking

• 2.5 years old, over 18,000 loans issued, 8,000 clients

• Uses M-Pesa [our definition of MM]

Objectives• To establish how the clients gauge

the socio-economic impact of utilizing technology-based financial services and if it drives them to consider using less cash in other transactions

• To establish and quantify the impact of cashless mobile micro financing on the lives of the poor clients, including the apparent shift from cash to e-money

Approach• Component of the capability approach

(conceptual framework): • Quant: Obtained 245 acceptable

questionnaires back• Qual: Will be doing FGDs and IDIs

FinalReport

Quant

Data

Qual

Data

ProgressReport

Design & Piloting

Aug 2012

Oct 2012

Dec/Jan Feb 2013

Demographics• Total of 245 respondents from 34 groups• Age• Min age – 21• Max age - 63;

• Education• High school - 45%• Primary school - 27%

• Marital staus• Married – 78%• Single – 21%

• Gender• Male – 45%• Female – 55%

Preliminary findings

Source of loans

Membership of MFI• Member of more than one MFI

before joining Musoni? 44%• Member of other MFI after joining

Musoni? 18%

Drop possibly attributed to Musoni’s motto:

“Musoni is best”, “I don’t need another MFI”

Why choose Musoni?

Other common reasons for choice

• Cheap/affordable• Easy to access credit• The loan interest is low• Good Service• Very efficient• Convenient• Faster to get credit• Quick response

• Cheap/affordable• Easy to access credit• The loan interest is low• Good Service• Very efficient• Convenient• Faster to get credit• Quick response

Musoni

Mpesa

Using M-Pesa for loans is better than cash because:

That they see it as “Money Saving” is significant

Being a cash society, this is substantial

What makes you prefer Musoni over other MFIs?

Which statements are true about using M-Pesa for loan

Value for mobile money is well appreciated

I keep money in M-Pesa for other uses besides loan

repayment

To many, M-Pesa serves to store small amounts of money

Avg: $40

How much money do you keep in Mpesa?

Which of these services do you use?

MM has multiple usage, beyond loan repayments

The desire to go cash-less is clear

If I it was possible, I would do all transactions in:

What do you do when you receive your loan money through M-Pesa?

The 26% are interested in credit history offered by bank or lower ATM withdrawals (compared to M-Pesa)

Do you send some of the loan to the bank via Mpesa?

Why do you change Mpesa back to cash?

The two main barriers

Since I began using Musoni services:

Confirms impact of cashless mobile micro financing

Why do you retain money in Mpesa?

Confirms need for services beyond money transfer, safety of Mpesa, …?

I will not change to any other MFI if it does not use mobile phones

Key conclusions• There is evidence of appreciation of

the impact of cash-lite• There is desire to shift to cash-lite• There are barriers for BoP to make

the shift– Notably societal dependence on cash– Transaction cost for electronic money

• Pegging mobile money to a product used by BoP makes it easier for them to appreciate cash-lite!– They need to experience MM over time

to appreciate– Is that why Safaricom launched m-

shwari?

Going forward…• Several focus group discussions

with clients• In-depth interviews with loan

officers• In-depth interviews with

management• Comparison with a few non-Musoni

clients