Money! We all need it. And when we have it, most of us want more of it. A little bit of a pay increase and we find new things to spend our money on. Many around the world are not in the privileged position to be able to spend any extra cash on luxuries.  For many in Africa, especially subsistence famers, have to use any extra surprise income for necessities, and keep their cash stored on their person or in their homes. There is still what some would call a fear or distrust of banking across the continent, which means less people are financially literate, and less likely to save! It is not long ago that a nation was built on its ability to save. When workers in the United Kingdom were able to save money due to improved farming techniques, they were then able to invest, which led to the industrial revolution.

There is more and more financial literacy in Africa. Micro financing, where groups of people pool their money together in the form of savings and also take loans without collateral, is becoming increasingly popular in rural areas, and is leading to some development. The problem with these is that often they are groups of people in the same local area and they are often all vulnerable to the same negative shocks. Lack of financial literacy and education means schemes like these, and savings accounts in banks are simply not being utilised. People prefer to keep their money where they can see it, incase it goes missing. But now, due to the influence and uptake of mobile money, things seem to be changing.

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Kenyans are now on average just 1.6 km from an M-Pesa retailer

According to a study about mobile money in Kenya has reduced poverty, especially in households lead by women. The massive expansion of M-Pesa in Kenya has lifted around 194,000 households out of poverty. That is around 2% of the population! Mobile money, which enables you to store money and conduct financial transactions using a mobile phone. Mobile phone usage has grown exponentially in recent years, with over 70% of Kenyans owning one and around 96% of Kenyan households households outside of Nairobi having at least one M-Pesa account.

The security offered by M-Pesa, as well as other mobile money services, the access to savings facilities that comes with being part of the service and the fact that it is cheaper to make transactions,  has helped mobile money grow and empowered many Kenyans to change their occupations. Many have come out of subsistence farming and been able to set up their own small businesses. People are now more prepared for emergencies and shocks to the market, and can even invest in developing their businesses. The M-TIBA insurance service, that we have discussed last year, is even helping gain access to health insurance.

The only concern is that too many people move away from agriculture, rather than using their new found financial freedom to increase the yields of their farms. An estimated 185,000 women are said to have moved away from subsistence farming to business or sales as a primary occupation. But, if it is changing the money managing skills of people, this will filter down and we would hope that it has a positive impact on farming in general, with more investment available for farms and therefore greater, in theory, productivity.

Mobile money is empowering women to change their lives and the lives of their families. People who may have been afraid of banks before are benefitting greatly from financial inclusion. Being able save, manage their finances and complete relatively cheap transactions, rather than relying on handouts or luck, has enabled many people to take more responsibility for developing their businesses.

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What is next for mobile money?

And what is next for mobile money? People can already buy and sell almost anything using it, take a taxi, and deal with their health problems. Like the industrial revolution, it is likely that the service will even enable people to invest in start ups, or stocks and share and further increase development and innovation within Africa. The further the reach of mobile phones, the more financial freedom and literacy people will gain. 2017 may be the year for block chain, and it is mobile money that has opened the door for this technology to be utilised in Africa. The key will be, being able to integrating all the different payment systems seamlessly.

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