Over the past years, mobile money has become the quintessential African success story. The reason is easy to explain: it contributes to shatter the worn-out picture of war and famine advanced for decades by the mainstream media, and conjures up a fresh and inspiring image of modernity and ingenuity, winking to Pan-African values but in a hi-tech fashion.
di Gianluca Iazzolino*
However, the story is a bit more complex, and concerns both technology and politics. Or, to say it better, it is about the way the emphasis on technology conceals the importance of politics.
In the wake of the overwhelming diffusion of mobile telephony across the continent, digital platforms to send and receive payments have cropped in almost every African country. According to a much cited statistic, around 100 million adults in Sub-Saharan Africa currently use mobile money, more than double the number of bank account holders. The cradle of this digital financial revolution, as it is often touted, is in Kenya, where M-Pesa, launched in 2007 by Safaricom, a Vodafone company, is used to do shopping in malls and purchase second-hand clothes in street markets, pay for bus fares and school fees, send remittances to relatives in the country and trade across borders. Accounts of successful mobile money deployments feed ‘Africa rising’ narratives featuring a ‘cheetah generation’ of African geeks and startuppers at work on their smartphones and laptops – for the ‘social good’. Very often, their entrepreneurial ambitions have less to do with the social good than with profit, but there is an entrenched attitude, among media and NGOs, to look at economic dynamics in Africa through the lens of development. This is why mobile money and, more broadly, digital financial services (DFS), are seen by development practitioners as the best opportunity to advance a ‘financial inclusion’ agenda. Told in broad strokes, this view suggests that having access to financial services – remittances, loans, payment of utility bills, insurance – is a precondition for economic growth, access to basic services and, in general, livelihood improvement.
Yet there are a few aspects to take into account.
To begin with, mobile money is only the latest addition to a broader repertoire of financial practices that shape the way people use and think of money. This aspect is often neglected by those who work to ‘financially include the poor’ and aim at ‘banking the unbanked – or the 2 billion people in the world without a bank account – by facilitating the access to digital financial services.
In my research at the University of Edinburgh I’ve tried to look beyond this narrative. By focussing on Somali social networks in Africa, I’ve examined how mobile money services interact with ‘traditional’ financial practices such as money transfers and rotating saving and credit associations, and I’ve found a strong resistance to rely on just one financial institution. Particularly in volatile contexts, where the political and economic situation is highly unpredictable, people tend to preserve alternatives, in the form of different storages of value, like hard currency, gold, or personal networks. This is why, even in a place where mobile money has become so popular such as Kenya, people prefer to convert the money they’ve just received in their mobile wallets into cash. Cash is still king because it acts as an interface between different social worlds. You can use it to buy produces from small farmers, who often cannot recharge their phones, or pay amounts so small that cannot be captured by digital means of payment. You can also pool cash in the purse of the treasurer of a saving club or in the tithe box of a church, where other people around can witness the donation and recognize you as a legitimate member of the community. When you don’t know what the future will look like, storing all your money just in your phone (or in your bank account) is just not wise. I’ve also found that, very often, having a mobile wallet to replace a brick-and-mortar bank is not enough to have access to the kind of financial help people need when they have to cope with unexpected expenses. In rural areas, for example, women often lack the proof of identity to open a mobile money account, and they have to rely on male relatives. This happens also to pastoralists and other historically marginalized groups across Kenya, often inhabiting remote areas where investing in communication infrastructures and building an agent network is not seen as politically relevant by the state or profitable by mobile network operators.
But what we talk about when we talk about inclusion? Included into what? Take Somalia, where the banking system had nothing but dissolved with the collapse of the state in 1991. Yet many Somalis in the country, in refugee camps and in the diaspora have continued to be integrated within transnational financial circuits through far-flung networks of money transfer agents, the human infrastructure of a system based on trust and known across the Middle East and in South Asia as hawala. Following September 11 and the onset of the so-called War on Terror, though, these informal money transfers, invisible to the scrutiny of states and security agencies, have increasingly being regarded as a possible conduit of money laundering and terrorism financing. Here development and security concerns converge, and financial inclusion appears as the strategy to sanitize financial flows of migrants and refugees by facilitating their access to licensed financial institutions. Ironically enough, in the past years major ‘dirty money’ scandals have involved banking giants such as Barclays and HSBC. But the dominant view at the core of the financial inclusion agenda is to bring these informal flows to the surface and make them visible, or ‘readable’. What is better than digital data?
Which leads to a further question: readable to whom? Indeed transactional data are a goldmine of information for understanding people’s spending and saving habits, social networks, and mobility patterns. Information on how people use their money to buy, save, pay for education or travel abroad could be harnessed to identify gray areas on national maps, improve protection policies for local dwellers and migrants and track the spreading of diseases. Or, at least, this should be an opportunity for the state. The problem is that this goldmine is mined by actors who are increasingly turning these data, from a by-product of their activity, into their core business. Meta-data are extracted, owned, repackaged and sold by private companies currently benefitting from regulatory loopholes. A new generation of credit score agencies are emerging in Africa, particularly in Kenya and South Africa, to assess the credit rating, or the financial trustworthiness of mobile money users. By oversimplifying the way someone is deemed worth of credit, this can further contribute to exacerbate inequalities and reproduce social exclusion. The idea that mobile money provides the opportunity to get rid of intermediaries does not consider that transactions are processed by big companies that crowd out small intermediaries and act as the only interface between the state and the citizens, turning these latters into customers. The most vivid representation of this process is the new electronic Nigerian national ID, launched in August 2014, and bearing the MasterCard brand.
Isn’t too much focus on digital financial inclusion drawing attention from the need to expand political and social inclusion?