A re-look at contribution and linkages between technological innovations, financial inclusion of the poor and performance of m-pesa in Kenya Prof. Nyamache Tom Mokweri*, Associate Professor & Principal, Prof. Nyakora Musa Ondara**, Professor & Principal/Rector *Mt. Kenya University, Nakuru campus, Nakuru, Kenya. **Mt. Kenya University Kigali Campus, Kigali, Rwanda. Online published on 3 January, 2012. Abstract The linkage between sustainable technological innovations and financial inclusion of the poor provides a useful framework for thinking about the potential contributions of M-pesa towards enhancing rural livelihoods and combating rural poverty in Kenya. By focusing on the rural poor and their daily financial money transfer needs and challenges the discussion in this paper is directed to the specific needs and priorities of the poor. M-pesa technological innovations are then viewed not as an end in themselves but as tools to facilitate a range of information, communication and M-banking financial transaction services that contribute to improving rural livelihoods. They can also be viewed as a tool to strengthen the effectiveness, transparency and responsiveness of a range of institutions – public, private and not profit – that serve the financial access needs of the rural poor in Kenya. There already exists many concrete examples of successful approaches to using M-banking application services to address the daily needs of the rural poor, and the session focused in particular on the rich experience of Kenya in this regard. Shared/community money transfer services such as M-pesa, M-kesho and Sokotele Zap Pesa Mkononi, Essar Telecom's Yu Cash, Telkom's Orange Iko Cash M-banking models, particularly those on rural information kiosks, have proved particularly effective in aggregating financial money transfer demand, serving as a community focal point, and attracting the supply of a range of supplementary services, including government services. Despite the foregoing, challenges remain in understanding how to scale M-pesa technological innovations that are adoptable, successful and sustainable to improve rural livelihood. Part of the challenge is to understand better what business models and technology models work best in a given context, and what roles should be played by various partners such as, government, the private sector, donors, communities, NGO's in scaling these M-Banking financial application models in different entrepreneurial efforts and donor pilot projects. Will not be sufficient. Yet one must be careful to fit the model to the context, to avoid one-size-fits-all solutions, and see the government as more work is needed to understand how the spread of M-Banking applications and particularly of mobile phones, affects the traditional institutions, intermediaries and service providers of the rural economy including, for example, extension agents and farmers cooperatives. The question is whether or not the two emerging models of service provision – kiosks and mobile phone-based services – will compete or complement each other? What can government and the donor communities do – as partners and service providers, and in terms of policy frameworks and capacity- building – to foster locally-appropriate innovation in these service models and help take them to scale? Top Keywords M-PESA, Mobile money, money transfer, M-banking. Top |