By Rob Matheson, Phys.org

Since 2008, MIT economist Tavneet Suri has studied the financial and social impacts of Kenyan mobile-money services, which allow users to store and exchange monetary values via mobile phone. Her work has shown that these services have helped Kenyans save more money and weather financial storms, among other benefits.

Now, Suri is co-author of a new paper showing that mobile-money services have had notable long-term effects on poverty reduction in Kenya—especially among female-headed households—and have inspired a surprising occupation shift among women.

Published in today’s issue of Science, the study estimates that, since 2008, access to mobile-money services increased daily per capita consumption levels of 194,000—or 2 percent—of Kenyan households, lifting them out of extreme poverty (living on less than $1.25 per day).

But there’s an interesting gender effect: Female-headed households saw far greater increases in consumption than male-headed households. Moreover, mobile-money services have helped an estimated 185,000 women move from farming to business occupations.

“Previously, we’ve shown mobile money helps you with financial resilience. But no one has understood, if you improve resilience, what happens over the longer term. This is the first study that looks at long-term poverty reduction and at gender,” says Suri, an associate professor at the MIT Sloan School of Management, who co-authored the paper with longtime collaborator William Jack, an economist at Georgetown University.

By 2015, more than 270 mobile-money services were operating in 93 countries, with an estimated 411 million accounts. The Kenyan study is important, Suri says, because it shows that mobile-money services aren’t just conveniences but do, in fact, have a positive impact on people’s livelihoods. “[That] can be useful for regulators trying to figure out if they want to allow it in their country, or whether someone wants to start a service in their country as an entrepreneur,” Suri says.

Measuring “agent density”

The study looks at M-PESA, the country’s most popular service, which launched in 2007 and has more than 25 million Kenyan users. There are more than 120,000 M-PESA agents scattered around the country, who handle deposits and withdrawals.

In 2010, Suri and Jack co-authored a study that showed M-PESA helped users borrow, save, and pay for services more easily. A 2012 study by the pair showed M-PESA helped Kenyans manage financial uncertainties caused by crop failures, droughts, or health issues. The idea is the M-PESA users can use a wider network of support, and receive payments more quickly, during dire financial times.

Read more: Mobile money access lifted two percent of Kenyan households out of poverty: study

Source: Phys.org