Syndicate content

Are mobile money transfer costs too high?

Sanket Mohapatra's picture

Kenya’s Central Bank Governor Njuguna Ndung’u recently urged the country’s mobile money transfer (MMT) operators to reduce their transaction fees. According to the Governor, “There is no way one can send 50 Shilling at 35 Shillings”. This translates into a seemingly exorbitant 70 percent fee for a small transaction equivalent to less than $1. Safaricom, the telecom operator that offers M-Pesa service (a highly successful Kenyan venture with more than 13 million clients), and other Kenyan MMT operators, however, maintained that the services they provide represent value for money. So are mobile money transfer costs too high?

Before we answer this question, it’s worth pointing out that even if mobile money transfer costs are fixed, average costs expressed as a share of the amount sent can rise if the average size of transactions falls. That is what happened with M-Pesa. M-Pesa charges a fixed fee per transaction within pre-specified fee brackets (see tariff poster). As the use of M-Pesa spread, Kenyans started using it for smaller and smaller transactions. The average amount sent through M-Pesa declined from the equivalent of about $50 in March 2007 to less than $30 by March 2009. The fees charged by M-Pesa, including withdrawal charges, expressed as a share of the average amount, rose correspondingly until mid-2008 (see chart). Because the average transaction size fell to the lowest fixed fee bracket in mid-2008, there was a downward jump in the fee. Then average costs rose again up until March 2009.

Delivering Aid Differently

Otaviano Canuto's picture

There has been an ongoing debate on the future need for foreign aid—a debate made ever more crucial by the current budget constraints in many countries as a result of the financial crisis. Some contend that aid budgets should be ramped up to counter the continued existence of severe poverty in the world; others argue that aid has been ineffective in the past, and in some cases, stymied growth in developing countries.

Bashing the Bank: Assessing the Efficacy of CSO Advocacy

John Garrison's picture

Civil Society Organizations (CSOs) have been targeting the World Bank Group for 25 years in an effort to influence its economic, social, and environmental policies.  Many of these advocacy campaigns have been quite contentious and critical over the years, the most visible being the ‘50 Years is Enough' campaign of the 1990s which called for the abolishment of the Bank.  While this particular campaign was obviously not successful, it is clear that some of the most important Bank reforms adopted over the years – environmental safeguards, compliance mechanisms, and access to information – were spearheaded by civil society. 

How Public Spending Can Help You Grow

Otaviano Canuto's picture

Last week’s State of the Union underscored the debate surrounding public spending as a measure to stimulate economic growth. President Barrack Obama argued that to “win the future” the US needs to make significant public expenditures to update the country’s infrastructure, health, and educational systems. The opposite view is that economic growth can only occur through decreased public spending and private sector growth.

Such varied opinions on public expenditures do not exist in the US alone—the debate is global. From the US to the UK, from Europe to Africa, from Latin America to Southeast Asia, to spend or not to spend is a question faced everywhere.

Beyond the epicenter of the economic crisis—the US and Western Europe—public spending has had an indeterminate effect on

Techno-Possibilization!

Parvathi Menon's picture

Traveling with the India DM 2011 team, meeting social enterprises that were trying to breakthrough the traditional mould of development, I was struck by the way technology was being leveraged. It came through as such a critical tool – an enabler that could single handedly shift the equation and bring possibility to the remote rural parts of India – shifting the balance of development and growth. Bringing in possibilities , empowerment and real access. 

Here is an illustrative sample of ideas that highlight the kinds of technology applications that are evolving as a result of entrepreneurial activity powered with a social spirit.

 

99 ways to spread peace

Saadia Iqbal's picture

 

Superheroes aren’t just into saving people from burning buildings or vanquishing evil masterminds. Some superheroes use their powers to spread powerful messages: messages of tolerance, celebrating diversity and understanding. The 99 are doing exactly that. 

The Poor Half Billion--what is holding back lagging regions in South Asia?

Ejaz Ghani's picture

South Asia presents a depressing paradox. It is among the fastest growing regions in the world. But it is also home to the largest concentration of people living in poverty. While South Asia is at a far more advanced stage of development than Sub-Saharan Africa, it has many more poor people than Sub-Saharan Africa.

Figure 1: Number of Poor People has increased in South Asia

Source: World Development Indicators, World Bank 2009.          
Note: Number of people living on less than US$1.25 a day at 2005 international prices. South Asia includes Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. East Asia Pacific includes China.

The Story behind 50 Years of Transport Investment in the Poorest Countries

The International Development Association (IDA) is a vital, yet oddly lesser known, arm of the World Bank Group. Briefly, IDA receives donor remittances and a portion of interest payments received from World Bank lending programs and disburses these funds as interest-free grants and subsidized loans to the poorest countries in lieu of traditional lending.

Do informed citizens hold governments accountable? It depends...

Stuti Khemani's picture

We are increasingly—and more openly than ever—grappling with what to do about the problems of politics and government accountability. Much emphasis and faith seem to be placed on the role of information and transparency. Using information interventions to enable civil society to hold their governments accountable seems so eminently sensible that it’s become an end in and of itself, an “already known” and ticked box. Is it?


Pages