The effect of mobile money transfer on the poverty levels among the elderly persons in Kiambu County
Elderly persons are a group of people exposed to poverty due to lack of financial empowerment as they are not in a position to earn an income. Access to formal financial services in Kenya is still low. In particular, the very poor people who are characterized by low literacy levels and generally low, irregular and sporadic income, in most cases do not have the appropriate financial tools that fit their lifestyle and can help alleviate their poverty. This research paper's main objective was to find out in detail what Mobile Money Transfer entails and its relationship to Poverty Levels among the Elderly Persons in Kiambu County. This area of study is not widely researched as yet. This study used the quantitative measure of descriptive statistics with a purposive sample of elderly persons in the Cash Transfer Program being spearheaded by the Government. Data was analysed using the statistical package for social sciences (SPSS) and entailed both a correlation and regression analysis of the variables. This study was able to show that elderly persons of Kiambu County positively embrace the usage of mobile phones. It also showed that through the usage of mobile phones they are able to feel more economically empowered by storing a little money in the Mpesa until the need for it arises. It was also clear from the study that poverty reduction is attributable to many factors and mobile money transfer is one among the many other factors. The main policy recommendation of this study is the need to begin income generating activities for the elderly alongside the monthly stipend given to them through the cash transfer initiatives. In addition there is need for a review of the modes of transferring funds to the elderly persons to incorporate the mobile money transfer platform which the elderly persons have positively embraced. CHAPTER ONE: INTRODUCTION 1.1Background of the Study The Middle class and wealthy individuals in society continue to enjoy banking services at their doorstep, whereas the poor still battle with hiding money under a mattress and walking long distances to access banking services in the 21st century. As a result of mobile money transfer (MMT) this scenario is slowly changing as more and more people continue to embrace MMT as a banking solution (Salzaman et al 2001) Mobile telephony adoption is on the rise and the related technological innovations have dramatically enhanced the capabilities of the mobile phones About two billion people worldwide are using a mobile phone. As the number of mobile phone increases there has been a pervasive impact on people's lives. Mobile phones adoption and use has a positive and significant impact on economic growth, and this impact may be twice as large in developing countries as in developed countries (Salzaman et al 2001) Following the emergence of Mobile Banking and other cash transfer services, positive impacts and pitfalls have been experienced and are evident in our day to day lives. As a nation state, Kenya has seen an incredible revolution with regards to information and communications technology (ICT) rapid growth. Statistics thereby show that by the late 1990s, less than 3 percent of Kenyan households owned a telephone and fewer than 1 in 1,000 Kenyan adults had access to mobile phone service. Amazingly by the end of 2011, 93 percent of Kenyan households owned a mobile phone thus benefitted from mobile phone services (Donovan, 2012) In the last five years mobile phone communication has grown faster in SubSaharan Africa than in most other parts of the world. African mobile phone subscribers grew from 8 million to nearly 80 million from 1999 to 2004 and are expected to increase to 250 million in the next four years (Manel, 2010) 1.1.1 Mobile Money Transfers Mobile money transfers (MMT) generally refer to the channeling of funds using the mobile phones. According to a financial access report (2009) half of the world is unbanked and mobile phones play a critical role in bringing banking services to the unbanked. In many developing countries 9 out of 10 people do not have a bank account or access to basic financial services. Poor people are often not considered viable customers by the formal financial sector as their transaction sizes are small, and many live in remote areas beyond the reach of banks branch networks. Informal banking services such as microfinance and village savings and loan associations remain limited in their reach. (Mishkin& Frederic, 2007) International Finance Corporation (2011) indicates that a study on mobile money offers a framework for a quick market study of a country to determine what type of mobile money services might be developed commercially. It offers models of user perception and demand surveys, develops a set of parameters such as regulatory environments, current access to financial services, and the requirements of potential mobile money service providers to run viable businesses that can spur or block mobile money development. The Kenya government recognizes the role played by the mobile phones, and associated technologies in the economic growth and development (Sessional paper, 2005) Therefore together with other stakeholders and development partners, Kenyan government has encouraged the development of communication infrastructure such as communication commission of Kenya (CCK) which is regulating the mobile service providers, fixed line service providers, and other stakeholders in provision of the service industry (Research ICT Africa 2004) At the same time the government has recognized with concern the growth of micro enterprises as the foundation blocks of development and industrialization. 1.1.2 Poverty Levels among Elderly Persons The World Bank defines poverty as whether households or individuals have enough resources or abilities today to meet their needs, inequality in the distribution of income, consumption or other attributes across the population, and vulnerability defined here as the probability or risk today of being in poverty or falling deeper into poverty in the future. Poverty is multidimensional and complex in nature and manifests itself in various forms making its definition difficult. No single definition can exhaustively capture all aspects of limiting the term to mean a lack of material well being and others arguing that lack of things like freedom, spiritual well being, civil rights and nutrition must also contribute to the definition of poverty. (Coudouel et al, 2002) According to the Participatory Poverty Assessment surveys (PPAs) poverty is hunger, lack of shelter; sickness and being unable to see a doctor (afford medical care) Poverty can also be defined as not being able to go to school, not knowing how to read, not being able to speak properly. Poverty is not having a job and fear for the future, living one day at a time. Poverty is losing a child to illness brought about by malnutrition and unclean water. Poverty is powerlessness, lack of representation and freedom by various estimates, people living in poverty constitute more than one half of Kenya's population. (Narayan and Nyamwaya, 1996) Economic growth has been inconsistent in the period from 1978 to the present, and while population growth has declined from 4% per annum in the 1970s to just below 3% in the 1990s, the Gross Domestic Product per capita has not improved much over the past three decades. Simultaneously, other social welfare indicators have also continued declining or remained mostly static, including life expectancy, child mortality, and primary school enrollments (O'Brien and Ryan, 2001) However, while overall poverty has remained static in Kenya, one should not infer that those who were poor 25 years ago are still poor today or that those who are poor today will continue to remain poor in future (Krishna et al,2004) 1.1.3 Effect of Mobile Money Transfer on the Poverty Levels A new wave of market based intermediaries is entering the scene with appealing products and services that could assess the challenges that confront financial development in low income countries or regions. Mobile Money services are seen as a new basic financial product which will make possible the extension of financial services to this community known as the "unbanked" M banking appears the highest where the physical presence of well functioning banking is the weakest, covering the gap left by many commercial banks specially in rural areas. It facilitates the remittance of money or payments to users in distant areas and allows the storage of savings. NGOs and Development programs also use Mobile Money as a platform for financial aid transfers. (Kirchner, 2012) Globally, the industry acknowledges the social and economic benefits that mobile money brings, especially to developing countries, given the physical limitations of financial services infrastructure. The wide reach of mobile phones enables more people to access financial services quickly and easily, even extending to billions of people in remote, rural areas with a less expensive, more convenient alternative. Mobile banking can keep low income consumers' money safe while giving them an affordable and flexible solution. (Demombynes&Thegeya, 2012) An article by Maina (2011) states that approximately 6% of the older population benefit from the Older Persons Cash transfer. This signals, however, that there is still much to do to ensure income security in old age in Kenya. The Program which targets elderly persons over 65 years may not be sustainable. This shows that many elderly persons are vulnerable to poverty and need to be given financial security beforehand. 1.1.4 Elderly Persons in Kiambu County Kiambu county is located in Central and constitutes 5 constituencies Gatundu South, Gatundu North, Juja, Githunguri, Kiambaa, Kabete, Limuru and Lari. It has a total Population of 1,623,282; 496,244 Households and covers an area of 2,543.4 sq.km The Population density is 638 per sq.km.This County