The role of mobile money in improving the financial inclusion of Nairobi’s urban poor

Abstract

The aim of this research is to examine the extent to which mobile money has improved the financial inclusion of Nairobi’s urban poor. Nairobi is Kenya’s largest and most developed city, but it is also the city where the country’s largest slum is located. The city’s poorest strata, the so-called urban poor, account for a large proportion of Nairobi’s population; most of them face exclusion from accessing formal financial services. However, mobile money has enabled them to access financial services more easily. Based on survey research conducted by the author in Nairobi, this paper demonstrates that the urban poor were far less likely to have a bank account than middle- and high-income groups, but that they had a high need for saving services/safe money storage. Mobile money has provided a savings service that is better suited to the needs of the urban poor than that offered by other channels and has enabled them to save small amount of money more frequently. This has encouraged greater use of mobile money and has significantly decreased levels of financial exclusion amongst the urban poor (p < .001).