The effect of M-shwari services on financial access in Kenya: a case study of Kisii county by

ABSTRACT Mshwari is the revolutionary new banking product for Mpesa customers that allow an individual to save and borrow right from a mobile phone while earning interest on money saved. The literature on Mobile technology innovations and how it has improved the access to finance by the low income earners in Kenya is not available. Specifically, few studies have been done on the contribution of mobile banking to financial access. The contribution of M-shwari services to financial access has not been researched being a new product rolled out by Safaricom Limited in November, 2012. This study aimed to conduct a comprehensive research on the effect of M-shwari services on financial access. The study focused on households who are low income earners in Kenya. This group is critical to Kenya as the country is looking forward to become newly industrialized country by the year 2030. Therefore, this study sought to answer the following research question; what is the impact of M-shwari services on financial access in Kenya? The result expected was a strong positive correlation between M-shwari services and financial access. The main objective that the study aimed to achieve was to establish the effect of M-Shwari services on financial access in Kisii County. The analysis covered a period of six months, starting from March, 2013 to August, 2013. This was so because M-shwari service was rolled out by Safaricom Ltd partnering with CBA ten months ago. A range of approaches and results are discussed within a unified framework; regression analysis was used to analyses the variables. To comparatively examine the individual effect of the two major variables, namely; Amount of deposits made and amount of money borrowed; a case study in Kisii County was carried out and an instrument testing the two variables was developed and data was generated by conducting an interview with the help of questionnaires. The questionnaires were self-administered on randomly sampled respondents in Kisii County. Three hundred and eighty three questionnaires were administered to Mpesa Safaricom Subscribers. The results from data analysis shows that, amount deposited to Mshwari account increased as the number of registered Mshwari users increased. This depicts that, financial access of low income earners was significantly increased by the service of Mshwari. Moreover, the amount of loans extended to customers also increased as the number of registered Mshwari users increased. This service has put ready money at the customers‟ disposal, thereby increasing access to finance. Regression analysis show a strong positive relationship between dependent variable (financial access) and independent variables Xi. The correlation coefficient showed an almost perfect correlation. This is also supported by the coefficient of determination which indicated that over 50% variation was explained by both variables. The study concluded that M-shwari services had an effect on the amount of deposits made to the accounts that were opened; the services provided a door for saving little amounts of money for as low as sh. 1. This therefore, increased access to finance and financial services to low income earners who are not able to operate a bank account. Secondly, Mshwari services also had an effect on financial access through credit advances. Access to finance was improved to low income earners, because they were able to access cheap loans of which they were not able to get. This independent variable had more effect to financial access compared to amount of savings made.