Better Than Cash – Using Mobile Money for Development in Kenya

Mobile Money Speeds Aid to Beneficiaries

Two steering committee members from the Great Commission Foundation and the House of Law and Justice receiving small grants via M-PESA . Photo Credit: USAID Kenya Transition Initiative

The following blog article is taken from the USAID snapshot Using Mobile Money to Reach Communities:

Recently, USAID’s Office of Transition Initiatives (OTI) program in Kenya started paying small grants to local partners via M-PESA mobile money. The program administers small grants to a range of local partners. These payments were traditionally made mostly through cash as well as checks and wire transfers which were difficult to manage and posed several challenges. When checks or wire transfers were issued, recipients had to take the time to go to a bank and the clearance process often caused delays and limited the beneficiaries the project could reach using banks. Furthermore, cash payments were sometimes the only option in more remote areas, which also created a security risk for staff carrying the funds in many parts of Kenya.

To address these challenges, OTI, through its Kenya Transition Initiative (KTI) program, capitalized on the increasing use of mobile phone technology to transfer funds through the use of M-PESA’s Bulk Payment portal. Through the use the M-PESA portal, payments can be initiated, approved, processed, and received in less than an hour, preventing delays traditional forms of payment can cause. Additionally, since M-PESA has more than 14 million subscribers, the technology enables OTI to reach more beneficiaries in more places quicker.

Since adopting the use of mobile money in February 2012, the OTI program has used the system to pay vendors and grant participants’ allowances and provide staff with travel advances, increasing efficiency and ensuring timely payment. What’s more, this payment mechanism does not compromise accountability of the program and recipients, as the online Bulk Payment portal provides internal control measures that can be set up to require two people to approve any transaction. In addition, the system generates an electronic paper trail that provides audit-ready documentation for each transaction that can even be monitored remotely by an audit department anywhere in the world.

The program found that mobile money is more accessible and efficient than other forms of money transfers for OTI beneficiaries. The use of M-PESA has reduced the amount of time project staff members spend on financial administration, allowing more time for program development and monitoring, while improving access to funds for project partners and grantees. M-PESA also gives project beneficiaries— particularly women and people in rural areas—an opportunity and an incentive to use the formal banking system, as they can easily link their M-PESA wallet to a bank account to start to save money in a bank. Through M-PESA, USAID/OTI’s innovative use of mobile money is a real example of the Better Than Cash Initiative in the field making a real impact on development.

USAID’s Office of Transition Initiatives (OTI) program in Kenya is managed under a contract with Chemonics International. Recently, Svitlana Hall from Chemonics Field Accounting and Compliance Team (FACT) was on the ground recently to further expand the use of mobile money across other Chemonics projects in Kenya and interviewed several project employees about their use of mobile money for development on the USAID OTI program. Those in the video include Anthony Lata, Finance Director, Joel Muigei, Finance Manager and Farida Asindua, Grants Manager, all sharing their views on shift from cash and check payments to mobile money transfer payments via M-PESA .

The team also prepared this graphic flowchart which provides a break-down comparison of the process flow between traditional cash advances and transfers made using M-PESA. The flowchart clearly demonstrates the time and cost savings of using mobile money.

I will be sharing the progress of various uses of mobile money for development in upcoming blog posts from other Chemonics projects in the field over the coming weeks so stay tuned.


Using Mobile Money to provide Payroll Services – an Example of the Better Than Cash Initiative from the Field

USAID FRONTLINES: For Mobile-Savvy Filipinos, Mobile Banking Is a Crucial Bridge

Video on Mobile Banking in the Philippines: Distant Access

Better Than Cash Initiative

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6 Responses to Better Than Cash – Using Mobile Money for Development in Kenya

  1. Pingback: Better Than Cash Initiative | Mobile Money for Development

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