by Alex Reddaway
Since Vodafone launched its M-PAiSA mobile money account in 2010 the number of active accounts has steadily increased each year. For some of those people M-PAiSA is the first formal financial service they’ve used, and for many more it’s the first digital financial service they have used. While this shows an encouraging increase in financial inclusion it raises the question of whether the usage of formal financial instruments is making a real difference in improving people’s lives, or even moving them toward achievement of the Sustainable Development Goals (SDGs).
The Impact Pathways methodology was developed to find out whether financial services benefited users, and to establish whether those benefits contributed towards achieving the SDGs. Visit the Impact Pathways website to learn more about this methodology. By taking a closer look at the human stories behind these numbers we can gain further insights into the specific ways in which they impact individuals and communities.
We interviewed two long time users of Vodafone Fiji’s M-PAiSA mobile money account, Marama and Vaseva*. They both capitalised on their familiarity with digital financial services to develop businesses that offer their benefits to their communities. They spoke to us about how the opportunities arose and the impact they had on their lives.
Marama and her family live outside Suva where she used to supplement her husband’s salary by selling baked goods. When her mother in law passed away last year, her husband took out a loan to cover funeral expenses. The loan exceeded the expenses and Marama was left with a large enough lump sum that she felt uncomfortable “hiding it under the mattress” or carrying it around in her purse. As much as theft, she feared what would happen if others found out that she had cash in the house. “If people in the village know you have money, they’ll all ask you for a loan”, she says. To keep it safe she opened an M-PAiSA account with the aim of securing the funds and adding more to it over time.
At around the same time as Marama opened her account, Electricity Fiji shifted to a pre-pay model where clients can either pay cash in Suva or pay digitally via M-PAiSA for the energy they use. As the only person in the village with an M-PAiSA account, Marama’s services were suddenly in high demand. People coming home from work would “get the shock of their lives” when they realised their credit had run out. Faced with a long trip into town or to an M-PAiSA agent to pay for a few dollars’ worth of electricity, neighbours offered to pay Marama a dollar commission to quickly get the lights back on. When asked why the neighbours don’t get an account, she answers that “she tells them how easy it is all the time, but they don’t do it!”.
As demand increased, Marama found that her capital was no longer sufficient: she was making almost daily trips into town to top up her M-PAiSA account to cover her clients’ payments. Her initial success with M-PAiSA gave her the confidence to approach a microfinance organisation called South Pacific Business Development (SPBD) to apply for a loan. When this was approved it really kick started her new business. With more working capital she now tops up only once a week and sells twice as much credit. She sends SPBD weekly payments of FJ $25; FJ $20 to repay the loan and an additional FJ $5 into a savings account which she was encouraged to open by the micro finance organisation. With her savings growing and her increased M-PAiSA balance she feels that she is well equipped to deal with emergencies. She plans to apply to become a registered M-PAiSA agent soon so that she can continue to grow her enterprise.
Vaseva is a widowed mother of three who lives in a suburb of Suva. Her late husband worked for Vodafone for many years and they opened an M-PAiSA account soon after the product was launched in 2010. She has been a regular user ever since.
Vaseva and her husband used to supplement his salary by offering short term loans to people in her community. The majority of her customers earn a monthly salary and borrow money either to get through to the end of the month or to cover unexpected expenses. The death of her husband would have made it difficult to continue to run their business due to security concerns, but thanks to their M-PAiSA account, and the privacy and control that it offered over her finances, Vaseva was able to carry on trading and even develop it further.
When Vaseva took sole control of the business she accelerated the shift to digital transactions. As a single woman she felt vulnerable carrying large sums of money or holding it in her home. Focusing primarily on customers who also had M-PAiSA accounts came with the benefit of greater physical safety, as well as significantly reducing the time required to deliver and collect funds, as she can transfer loans to their M-PAiSA accounts directly.
The growth in M-PAiSA usage allowed Vaseva to develop a secondary business and provide her community with a much-needed service. Many Fijians move to larger cities or abroad to earn a better living and send money back to support their families. However, population dynamics can fracture the broad social networks on which many families rely for support in times of need, especially when younger family members leave their remote and poorly connected villages. Person to person (P2P) transfers play an important role in preserving these social networks and enhancing community resilience. Now family members living elsewhere in Fiji, or even abroad can send money to Vaseva’s M-PAiSA account which she then delivers to their relatives in cash. By providing the last link in the chain, businesswomen like Vaseva ensure that vulnerable unbanked communities can maintain the fabrics of the social and financial networks that provide an important source of resilience.
Marama and Vaseva’s stories show how access to a single financial product can bring about a range of benefits that contribute towards reaching the SDGs.
Using the M-PAiSA account Marama was able improve their family’s income by protecting and then building up a lump sum that allowed her to launch her business. She now contributes as much, if not even more, than her husband to their household finances. A diversified income and access to capital means that Marama’s family is more resilient to shocks which research has shown dictates whether or not families fall back into poverty in difficult times. By enabling P2P transfers, Vaseva plays a role in maintaining and broadening social networks which are an important source of support in times of need. By enriching incomes, providing sustained resilience, and preserving social networks, digital financial services contribute to achieving SDG 1: No Poverty.
Without the privacy and control afforded to them by their M-PAiSA accounts, both women would have struggled to build up and preserve the working capital required to operate their businesses successfully. Studies by GSMA in Kenya have shown that among women sending remittances 94% saw mobile money as a means of ensuring privacy compared to 52% who said the same about cash transfers. More privacy and control allows women to take charge of their own financial future, a vital step towards SDG 5: Gender Equality.
Increased physical safety was an important consideration for both women. Marama opened an M-PAiSA account because she felt vulnerable carrying cash or hiding it in her house while Vaseva favours digital transactions to avoid the risk of carrying large amounts of cash around. Research shows that the shift from cash to digital transactions significantly reduces crime rates and contributes to SDG 11: Sustainable Cities and Communities.
*Names and personal details have been changed to protect anonymity.
For more information and resources please visit the Impact Pathways website.
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GSMA, VISA, & BFA. (2013). Unlocking the Potential: Women and Mobile Financial Services in Emerging Markets.
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