M‐Pesa and the ‘Market‐Led’ Approach to Financial Inclusion

Abstract

Inclusive financial systems play a critical role in fostering economic growth and development. However, the question of what is the best means of achieving this has long been a puzzle. In this article, I use the mobile money revolution in Sub‐Saharan Africa to show that the greatest examples of financial development have come from nations embracing a market‐led approach that removes repressive regulations and gives entrepreneurs the freedom to discover innovative ways to access the unbanked. Comparing the successes and failures of mobile money across the continent over the past decade, I argue that the best predictor of whether a country will reap the benefits of these transformative innovations is whether its government embraces a laissez‐faire, or ‘enabling’, regulatory approach that encourages entrepreneurship and experimentation.

Towards an economic geography of FinTech

“…Alampay et al, 2017), or "…unlock significant economic opportunity and accelerate social development" (Ding et al, 2018: 20). Similarly, Manacorda and Tesei (2016) refer to mobile phones as 'liberation technologies' and 'mobile money' has been labelled a 'revolution' (Burns, 2018;Jack and Suri, 2014) -what Maurer (2012) calls an 'empowerment narrative'.…”

“…remittances and other private cash transfers) (World Bank, 2017). Definitions of 'financial inclusion' vary, such as expanding the ratio of the population that has access to formal financial services (Burns, 2018), delivering sustainable and useful financial services at affordable costs to disadvantaged and low-income people (Kim et al, 2018), or even the broader condition of financial regulations to ensure customers' finances are adequately protected against risk (World Bank, 2017).…”

“…Whatever the advantages or disadvantages of MFS growth, governments are central to their promotion across the global south (Burns, 2018;Ding et al, 2018;Lenka and Barik, 2018;Shim and Shin, 2016;Zalan, 2018). Gabor and Brooks (2017) show that MFS is orchestrated by a combination of public, private, and philanthropic agencies in a "fast evolving fintech-philanthropy-development (FPD) complex" (p. 424).…”

Provider and Consumer Perceptions on Mobile Money and Microfinance Integrations in Ghana: A Financial Inclusion Approach

“…Microfinance schemes are not only useful financing options, but important tools for economic empowerment and social change, particularly for women [23,27,[34][35][36][37]. For instance, the authors in [37] surveyed 840 women beneficiaries of microfinance in Ghana and concluded that about 72% of the respondents reported being better financially resourced to provide the educational, health, and basic needs of their families.…”

M-PESA and Financial Inclusion in Kenya: Of Paying Comes Saving?

“…On the supply side, as mentioned the penetration of bank accounts is low, particularly in rural areas, but adoption of M-PESA is widespread. Kenya is even often presented as "the poster child that 'digital payments can make the world a better place" [13]; see also [14] (p. 412).…”