NAIROBI — The fight against global inequality has gained a surprising new tool: the cellular phone. Emerging research indicates economic growth among even the poorest citizens worldwide thanks to mobile money providers and programs.
The conclusion of a ten-year study published last December by Science is the first measurable evidence that mobile money reduces inequality. Implemented in both the Philippines and Kenya in early 2007, mobile money allows citizens access to financial services that are otherwise unavailable. MIT economist Tavneet Suri, who co-authored the pioneering experiment, said this was the first study that looked at the long-term poverty reduction of mobile money technology
The popularity of mobile money soared after its introduction, particularly in Kenya, where mobile money services were estimated to have boosted daily per capita levels of consumption by two percent. That may not sound like a terribly high figure, but that directly translates to 194,000 families in Kenya rising out of extreme poverty.
Mobile money works not just by providing access to financial management for those without bank accounts; it provides financial independence for its users. The economic benefits of mobile money were most strongly concentrated among female heads of households. Suri estimates that 185,000 women graduated from agricultural to business occupations. This statistic is believed to be a result of mobile money’s ability to separate cash from a single household pool, providing a rudimentary budget that opens up new opportunities for investment.
The Kenyan study is just the beginning of proof that mobile money reduces inequality. The sixth “State of the Industry Report on Mobile Money” unveiled by GSMA at the end of February shows tremendous promise for the future of the world’s poor thanks to mobile money. The report boasts an impressive array of statistics: more than half a billion mobile money accounts have been registered globally as of the end of 2016, and almost 174 million of those are used at least every 90 days.
The report goes on to show that mobile money has a broadening set of applications, including payment of school fees, solar power, and even sending money across national lines. It bolsters job creation and productivity, and the transparent nature of transactions makes it resistant to hidden fees or financial leakage.
GSMA is taking the success of mobile money one step further, looking toward the future. On the same day it released its report, GSMA launched a free open-source developer portal, allowing compatibility across the multitude of individual mobile money applications different countries and providers use.
“With two billion people still excluded from financial services, mobile money’s potential for the future is greater still,” GSMA director general Mats Granryd said.
Though poverty continues to be a persistent issue throughout the globe, mobile money reduces inequality by empowering the world’s poor. The closest bank is no longer a hundred miles away, it is in the palm of one’s hand.
– Dan Krajewski