Posted by John Gitau, CEO, Kenya Financial Education Centre

This photo two hands, one holding a mobile phone displaying an M-PESA mobile money services interface, the other holding a few bills of cash. In the background is an M-PESA poster.The other day, I received a text message from an engineer keen on financial inclusion matters. He wrote:

“Morning Sir! I was just thinking. At what cost is financial inclusion? I have just read a big sign in Donholm: Redeem your airtime for cash. Does this add to financial inclusion? If I am stuck, someone can sambaza (share) airtime and then I can redeem it as cash and get fare to go home. In financial inclusion, since you are in this field, is it all about such access and convenience to financial services?”

I didn’t immediately have an answer to his question. It sent me thinking broadly and deeply. Through M-Pesa, Safaricom has a “financial inclusion” base of over 16 million Kenyans. Then I remembered that in the G20 Los Cabos Summit of June 2012,* mobile money use was left out as one of the measures of financial inclusion. Having a formal bank account was in. But this realization left me more confused. Safaricom mobile connectivity through its M-Pesa product is excluded as an inclusion parameter just because Safaricom isn’t a bank? Wait a minute, now we have M-Shwari, a bank account at Commercial Bank of Africa available to M-Pesa customers through Safaricom. How shall that be treated? Inclusion within a largely excluded service? Of all Safaricom M-Pesa customers, are only those with M-Shwari accounts counted as included?

This reminded me of a story in Chinua Achebe’s Things Fall Apart about a character called Dimaragana who could not give his knife to cut dog meat because dog meat was taboo, but he was ready to cut the dog meat with his teeth. So, Safaricom customers using M-Pesa are not included but perhaps if they go deeper into its system and buy a product called M-Shwari, they’ll get included? Unsatisfied, I thought about a few other financial services scenarios. If an M-Pesa customer were to close off her M-Shwari account while still using M-Pesa, would that be exclusion? Suppose instead of M-Shwari, she sends money to her retirement benefit scheme through her Mbao Pension scheme. Would she then be considered included? She could also buy an insurance policy from CIC Insurance using their Ksh 20 insurance-per-day scheme and make her payments through M-Pesa… Still excluded?

There are real implications to this label that affect our larger pursuit of financial inclusion. Safaricom is neither a financial institution nor an MFI. Who will protect consumers from exploitation in the name of financial inclusion if the telcos entering the field aren’t acknowledged as providing financial services? Appropriately recognizing financially inclusive services might make the difference between facilitating an inclusive mobile financial services field and leaving the ever-expanding sector to become a free-for-all in profit taking. On the other hand, aren’t they justified by reaching many consumers with financial services at a level that financial institutions haven’t so far?

Sorry engineer, I have no answer for you now, but through this post I am seeking help from my colleagues in this space. Please help me answer the engineer, otherwise he will lose confidence in me. Meanwhile, Sir, go ahead and redeem your airtime for cash. While airtime is not a formally recognized financial service, neither is your cash—not unless you use it to buy a financial service. You are lucky because I know you have a bank, and thus you are in the included statistics in Kenya. Otherwise you could use all kinds of services without being counted, according to G20 standards.*

John Gitau, a financial education consultant and trainer, is the CEO of Kenya Financial Education Centre, an independent centre that offers financial training to staff and clients of financial service providers. His passion is teaching financial literacy and designing financial products for the poor. From 1992 to 2010, he was a Capital Markets Authority regulated investment consultant with Bridges Capital Ltd. He is a master trainer of trainers with the Global Financial Education Program (GFEP), developed by Microfinance Opportunities in collaboration with Freedom from Hunger and Citi Foundation.

Image credit: AFRiTORIAL

*This post was modified from its original version on March 20, 2013. The original post cited the “Alliance for Financial Inclusion (AFI) Global Policy Forum in South Africa” and “AFI standards” in the third and sixth paragraphs, respectively. These mentions have been replaced with the “G20 Los Cabos Summit of June 2012″ and “G20 standards.”

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