Ever since mobile money (MM) came along, ‘cashless’ is all the rage in East Africa. Money experts have a sack-full of reasons why mobile money is good for the economy. The truth is, however, making a case for MM is easy – no doubt, but, one perspective that is often left out in almost all the headlines is how people interact with it (MM). In particular, those living or working in rural/peri-urban “informal sector” micro-economies – matatu drivers, Mama mboga, boda boda guys.This segment is important for several reasons
- It makes up 55 per cent of Sub-Saharan Africa’s GDP and 80 per cent of the labour force according to Afdb’s Recognizing Africa’s Informal Sector
- Sub Saharan markets are mostly dual economies – a mix of formal and informal markets
- 90% of all transactions in informal markets are conducted in cash money.
- The unbanked and underbanked are more likely to be found here
Valuable insights, unlikely to come up in the comfort of an office, have sprung out of my regular interactions with this segment.
Listening to the people
Consider Gichage for instance, a fruit vendor in Nairobi who says
“Mpesa si pesa” swahili for ‘Mpesa is NOT money’,
right after I ask to pay for my 3 mangoes via mobile money. Or, the same look I get whenever I ask to make low value payments for boda boda flights or lunch at mama mboga’s (less than 200 KES/ $ 3).
“Hauna cash?” – Don’t you have cash?
“Utatuma na ya kutoa?” – Will you send with additional fees to cover withdrawal charges?
Almost always, a quick withdrawal into cash at the local MM agent (at a cost of time and money) becomes necessary to settle my bills. The rest of the time, I oblige and pay dearly to have them accept my money.
Gleaning insights from the ground
Here, it seems I am a foreigner because, unlike the fancy malls where I pay with card/cash/mobile money – cash (and social capital) are the norm. What’s more, it is not just within this interaction space, but on the fringes as well where, the infomal crosses path with formal and semi-formal sectors & actors. My electronic money – MM and debit cards – is no good here – arguably, “si pesa”
Are attempts at replacing cash with digital money, deep down, really about taking on ecosystems? – systems comprising of actors who interact and transact mostly in cash, social capital based debt instruments, community currencies or what have you.
If it is anything like the image above, where cash relationships are a complex web of bubble collisions, then, replacing cash is a greater challenge than we think.
This post is a guest blog by Michael Kimani (@pesa_africa) founder of the African Digital Currency Association