As reported in the working paper “Mobile Money Services and Poverty Reduction: A Study of Women’s Groups in Rural Eastern Kenya,” women’s groups in Eastern Kenya are using M-PESA as a part of an informal savings product. Through the Vinya wa Aka Group (VwAG), along with support from the New Partnership for African Development (NEPAD), 21 women’s groups were provided with financial literacy training which included investment, savings, money services, and management. After their initial training, Dr. Ndunge Kiiti of Houghton College and Dr. Jane Mutinda of Kenyatta University stated that the goal of the research was to see how mobile money services could be used as a tool in the women’s groups to reduce poverty in Eastern Kenya.

While all the groups had formal savings accounts along with other investments, the groups still continued to use an informal savings vehicle that has traditionally been used in areas that lack access to an institutional savings product. ROSCAs, Rotating Savings and Credit Associations, are groups of people who form in order to force themselves to save on a schedule. The group members will meet weekly for a set number of weeks, and in each week, each person “deposits” their savings for the week. But, instead of letting the money accumulate each week , a specific person in the group receives the entire pot for the week. The idea is that each week each group member saves a specific amount (say $100) with the understanding that when it is their week, they will receive the pot. For example, if there 10 group members, each week for 10 weeks one individual will receive $1,000.  During the weeks that a member does not receive the pot, they still must deposit $100, even if they have already received the pot. This is an example of a social contract in which the group members hold the other members accountable to pay each week. ROSCAs are especially popular when individuals are looking to make a larger purchase (i.e. stove, TV, merchandise for their business) and they do not have a formal financial product to save the money.

In these women’s groups, they saw M-PESA as a benefit in order to receive payments on time from the ROSCA group members. Instead of having to attend each weekly meeting to make the payment, women transfer the money using M-PESA. This allows for group members that are not located in the area, either permanently or because of travel, to still be a part of the group and make timely payments.

This is a great example of how end-users will always dictate how a product or service is used. In the case of the women’s groups, they saw a way to leverage M-PESA in order to make their ROSCAs more efficient. While M-PESA was not originally developed for ROSCAs, this is another way for Safaricom to market its services. These types of reports are very valuable since it shows how customers are using a product or service. By understanding how and why the service or product is being used, companies can further tweak their model or even create other innovative products to match the needs of the customer.