1. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
Mobile Banking Influence on Wealth
Creation and Poverty Reduction for the
Unbanked
IST-Africa 2013 Conference & Exhibition
29 - 31 May 2013 29 - 31 May, Nairobi, Kenya
By
Jimmy Macharia, PhD
Associate Professor of Information Systems &Technology,
and Dean, School of Science & Technology,
United States International University

2. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
Overview
1. Introduction
2. The Problem
3. Literature Review
4. Methodology
5. Results
6. Discussions
7. Conclusion
8. Further Research

3. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
1. Introduction
• No of mobiles > No of banked people
(David, 2006).
• Speculation and optimism on mobiles
–effect on economic development in
Africa (Aker and Mbiti, 2010).
(Corbett, 2008).
–potential to boost economic growth
and poverty reduction for its
unbanked citizens.

4. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
2. The Problem
• Does M-banking adoption, use have a positive influence
on economic development and poverty reduction for the
unbanked? ( Lonie 2010).
• knowledge gap on
– Extent mobile money impact economic development
and wealth creation (at National, Individual level)
– Why replicating M-Pesa’s success even in neighbouring
countries has challenges
– Why strong strategy and good bank business models,
not sufficient to create impact of financial services in
developing countries (Amrik and Ignacio,2009).

5. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
3. Literature Review
• Matthew, Jeann and Schmeiser,(2012)
– unbanked and under banked consumers are more likely than fully
banked consumers to :
• have lower incomes and
• be younger,
• minority,
• female,
• unmarried,
• unemployed, and
• unwilling to take financial risks

6. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
4. Methodology
• Design : cross-sectional approach
survey
• Target population: unbanked and
banked
• Sample: villages/estates/slums -
individuals, (N=123)
• Instrument Validity
–constructs adapted from preceding
research (Luarn and Lin, 2005:873).

7. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
5.1 Results
• 62% youth<35 Yrs, 48.2 % female, 45.6 % Single single

8. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
5.2 Results

9. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
6: Discussion
• Widespread ownership of mobile phones
– Access to mobile financial services
– Enable access and inclusion in the mainstream
financial system.
• Agreement with prior research
– Lack of enough Money greatest reason for no
bank account
– Cell phone can potentially serve as an
instrument for economic development in Africa
[1][22].

10. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
6.2 Discussion
• Previous Studies Criticized:
– Not enough evidence
• On gains, and more so to the individual user
– Economic studies
• focused on the effects of mobile phones for
particular countries and markets.
• This Study: Important Results:
 mobile money ecosystem increases the savings
of the unbanked by more than 50% annually.
 mobile money ecosystem increases the wealth
of the unbanked by more than 42% annually.

11. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
7. Conclusion
• This study has established that,
– buying airtime
• most used mobile payment transaction for the
unbanked,
– Mobile money ecosystem
• plays a major role in uplifting standards of living of
the unbanked through wealth creation.
– mobile banking ecosystem
• increases the SAVINGS of the unbanked by more
than 50% annually.
• increases the WEALTH of the unbanked by more than
42% annually.

12. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
8. Further Research
• Further research
– specific factors and their contribution to wealth creation.
– Large scale validation of results
• Practical Implications
– Benefits to stakeholders in Mobile Ecosystem
• policy makers,
• mobile network operators,
• microfinance institutions,
• banks and
• development partners
• the government of Kenya

13. Session 10e Friday 31, May 2013 IST-Africa 2013 Copyright 2013 Jimmy Macharia
Questions