The following is a guest post by Billy Jack from Georgetown University’s Economics Department and Tavneet Suri from MIT’s Sloan School of Management.

New data from the fourth round of a survey of Kenyan households confirm what every visitor to this East African nation knows: the spread of mobile technology and its adoption by broad swathes of the population continues.  Probably the most successful of all the innovative mobile solutions is M-PESA, Safaricom’s mobile banking product that allows users to send money across the country (and recently, beyond) in an instant, as well as providing a safe and secure savings instrument, and a convenient bill payment capacity.

Launched in March 2007, M-PESA was originally going to be “banking for the unbanked” and “financial services for the poor.”  While members of the economically marginalized population did adopt the service early on, the first rounds of our survey showed that up-take was nonetheless concentrated amongst those who were relatively better off.  It was natural to ask whether M-PESA would show the same pattern of adoption as so many other promising technologies in the developing world – from hybrid seed to insecticide-treated bed nets, from seat belts to solar panels – with those at the bottom of the pyramid struggling to exploit the potential benefits.

Through technological efficiency, user-friendly design, marketing acumen, an explosion of cash-in/cash-out agents, regulatory largesse, and perhaps some luck, M-PESA is now used by 86 percent of households outside Nairobi.  Of particular importance however is the changing pattern of utilization, as adoption spreads to the lower strata of the socio-economic ladder.

Our data, which is representative of most of Kenya outside the capital (where M-PESA is ubiquitous), shows a growing share of lower income households using M-PESA.  For this population, median per capita consumption is low, a few cents less than $2 per day; and the bottom 25 percent of the population live on $1.10 per day or less.  Our survey, which tracked the same households over a four-year period, found that in 2008, households with consumption above the median were nearly three times as likely to use M-PESA as those in the bottom quartile.  In particular, half of those in the top half used M-PESA, while only 18% of those in the bottom quarter did so.  Utilization among those in the second poorest quartile was intermediate, about a third (see Figure 1).

Figure 1: M-PESA use by daily per capita consumption

M-PESA has grown in all strata of the population, and while those at the top remain more likely to use the service, the gap between the top and bottom has narrowed substantially, partly due to the steady increase among the poor, and partly due to saturation among the better off.  But concentrating on the gap between rich and poor is less informative than focusing on the simple fact that nearly three-quarters of the bottom quartile have adopted a service that five years ago did not exist.  If anything, high rates of adoption by the better off have helped sustain the product, thereby facilitating access by the poor, as the pricing structure does not distinguish between services provided in cosmopolitan Nairobi and remote Turkana, or between remittances sent across the street or across the country.

Similarly, because of the correlation between income and bank access, M-PESA was initially used more by the banked population than the unbanked.   Indeed, in 2008 just one-in-five of the unbanked population used M-PESA, but since then while the number of households with bank accounts has remained relatively stationary, the share of this unbanked population who use M-PESA has shot up to 75 percent (see Figure 2).  Again, focusing on the divergence between the unbanked and the banked populations (fully 96% of the latter are now M-PESA users) is of limited utility: the fact that so many of the unbanked population have access to a modern electronic financial tool is what’s important.

Figure 2: M-PESA use by banked status

Finally, very recently Safaricom has revised the M-PESA tariff schedule.  Until now, the cost to the sender of sending money was a fixed 30 shillings (about 40 cents), plus the cost of withdrawing the money, if the recipient wished.  This made small transfers of a few dollars relatively uneconomic, while apparently benefiting those who could send larger amounts.  The fee structure has however been revised, with users able to send up to 50 shillings for a charge of just 3 shillings, and from 50 to 100 shillings for 5 (see https://www.safaricom.co.ke/index.php?id=255 for a complete listing).  This reform could well expand the benefits accessible by those at the bottom of Kenya’s pyramid even further.

On Thursday, March 29th, The NetHope Payment Innovations Working Group held its first session.  The theme focus of this session was a general overview of branchless banking 101.  The working group was lead by Sarah Rotman of the Consultative Group for Assisting the Poor (CGAP).  Sarah has worked with CGAP for nearly fours years, and has conducted extensive research on the impact of technology on financial access for the world’s poor.  Sarah’s presentation covered the basic factors of branchless banking, and took a closer look at how it is helping more of the world’s poor achieve access to formal financial services without needing a traditional bank branch nearby.  The presentation lead to an engaging question and answer session where the working group members asked questions and added commentary.  Much of the conversation surrounded how NGOs could become more involved in the mobile money/branchless banking movement.  This is a question the working group will continue to explore in the coming months as we discuss technology’s role in the supply of more formal financial services to the 2.5 billion adults that are still unbanked today.  The Payment Innovation Working Group will convene every month, and breach themes that will garner a better understanding of electronic payment solutions for our members.  We also hope to create relevant tools to help the NGO community more efficiently implement and deploy electronic payment solutions within their own programs.  If you are interested in joining our next session, please contact hamilton.mcnutt@nethope.org

Image from Wikipedia

Over the last decade, Wikipedia has become as ubiquitous a research tool for the modern American student as the encyclopedia was for their parents — though even that has changed now that the Encyclopedia Britannica has gone completely digital.  But Wikipedia has remained largely inaccessible for students in remote corners of the world where English, German, French and Dutch are not spoken — languages that receive the most Wikipedia coverage.

Wikidata, a new project from the Wikimedia Foundation, plans to change that by creating a free knowledge base about the world that can be read and edited by humans and machines alike, making updating and translating processes easier and more efficient.  Through this new project, Wikipedia will provide data in all of the languages of other Wikimedia projects.  Announced in February at the Semantic Tech & Business Conference in Berlin, the new project promises to be groundbreaking in both its approach and scope of its audience:

“Wikidata is a simple and smart idea, and an ingenious next step in the evolution of Wikipedia,” said Dr. Mark Greaves, Vice President of the Allen Institute for Artificial Intelligence.  “It will transform the way that encyclopedia data is published, made available, and used by a global audience.  Wikidata will build on semantic technology that we have long supported, will accelerate the pace of scientific discovery, and will create an extraordinary new data resource for the world.”

Photo Credit: www.thehindu.com

And that’s including parts of the world that have long been left out of Wikipedia coverage because of language barriers and the digital divide. Though the project is still in its initial stages, the first phase of the project will take place over the next several months as the development team creates one Wikidata page for each Wikipedia entry for over 280 supported languages.  By using a unified data management system, data entered in any language will immediately be available in all other languages and editing in any language will be possible and encouraged by the projects completion, slated for March 2013.

The initial development of Wikidata is being funded in part by the Allen Institute for Artificial Intelligence and the Gordon and Betty Moore Foundation through its Science program, both of which see enormous potential for Wikidata and the role it will play in creating common formats for online data:

“It is important for science,” said Chris Mentzel, Gordon and Betty Moore Foundation science program officer.  “Wikidata will both provide an important data service on top of Wikipedia, and also be an easy-to-use, downloadable software tool for researchers, to help them manage and gain value from the increasing volume and complexity of scientific data.”

Wikipedia’s development team is not new to revolutionary ideas and raising standards.  Jimmy Wales, one of the founders of Wikipedia and the Wikimedia Foundation, was quoted several years ago for his vision of “a world in which every single person on the planet is given free access to the sum of all human knowledge.”  For students in parts of the world where online educational resources in their native language are far and few between, Wikidata promises to take one step closer to this goal.